Business Brokers BC Blog

Often we come across business owners that decide not to use an advisor to help them sell their business usually or especially when they are dealing with only one potential buyer.  Usually the buyer has approached the business owner direct and works slowly to get to know them.  At the right time the buyer makes an “offer” to purchase the business and tells the seller not to talk to any other buyers.  While this may be of interest to the owner, it often results in the business owner getting less than what is actually possible.  It also effectively ties up the business as the owner stops actively marketing it to other potential buyers.

To get the best price possible a business owner should seek as many interested buyers as possible.  In business brokerage we say “one buyer is no buyers”.  The idea is to create competing interest and bids for the same business.  This not only compels people to move faster but it also quickly determines the seriousness of their intentions.  It gets rid of the time wasters.  It reduces the time to make decisions and get the transaction done, otherwise they can drag on for far too long.

There are also other reasons to use an intermediary:

1. A lot of the background work a business owner would have to do to sell their business is done for them.  We create a Confidential Business Profile that contains all the information a buyer needs to make an informed decision.  A business owner alone may not be sure what information to provide, he may also release sensitive information when it is not necessary.  (I saw one case when the “Buyer” was a rival company and was trying to find a list of the target company’s clients so that they could approach them directly and say “Hey, do you know XYZ Corp. is for sale – where do you plan on getting your “goods/services” from in the future?  We just happen to be in the same business”.  Very nasty).
2. As intermediaries that act for sellers and buyers we also constantly have interested buyers seeking acquisition targets.  We also know where the new buyers are.  We are able because of our training to look objectively at a business tell the owner what he needs to do in order to get the highest price and will go to work marketing the business to as many potential buyers as possible.
3. We also play another role very effectively.  We are able to take a very aggressive approach when negotiating.  We act as the “bad guy” or play dumb so that the relations between the owner and the purchaser always remain on good terms.  I don’t mind being the bad guy to get the owner a better deal.
4. We as business intermediaries act as a catalyst, in finding the buyers, in negotiating and in bringing a transaction to a close.  In business sales some very difficult issues will arise.  It can be costly and time consuming to have lawyers or accountants arguing about these issues.  As a result we often take on the role of mediator by looking at the problem from both sides.  This results in a compromise being reached faster and the transaction being more likely to complete.

As you can see there are many reasons to using an intermediary and at a minimum every business owner should at least have a conversation with one about the process of selling.

This entry was posted on Saturday, October 10th, 2009 at 7:20 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.