April 5, 2022 Last updated April 5th, 2022 752 Reads share

All You Need to Know About Business Brokers

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A business broker can be described as a trained professional who helps individuals buy and sell companies, just like a real estate broker helps people buy new homes or properties. If you’re interested in becoming your boss or if you’re considering expanding your business, you can get help from a business broker to analyze and evaluate a suitable business in your area of interest. 

The only thing you should know is that there are certain broker certifications to look for if you want to make sure the broker can successfully guide and advise you throughout the process. In this article, we take a closer look at what the meaning of a business broker is and what they actually do.

 

Basic Job Description

The tasks of business brokers are often broad and include more than just the acts of selling. A business broker usually wants to get involved early in the process of a planned company sale to take measures to increase the company’s market value and/or to facilitate and speed up the sales process.

They can also be entrepreneurs’ advisers when the entrepreneur already has contact with the buyer but needs a business broker’s expertise to complete the sale of the company. For those who are looking to buy a company, company brokers can offer help through a search assignment.

Business brokers also offer advice on other forms of change of ownership, for instance, analysis, valuation, and process management to identify and bring in partners and investors in situations where the company needs additional equity and/or additional expertise.

What They Do

A business broker, as we said earlier, acts as a mediator and looks for stakeholders, and then tries to find a buyer. Their day begins with a review of all the offers they are currently working on. Their work assignments include keeping in touch with both buyers and sellers to sort out any questions and then be able to continue working on the agreements.

Then they must create a relevant company description, a thorough and easy-to-understand prospectus that contains a relevant financial forecast for the sales entity. A prospectus usually comprises 5 to 10 pages, depending on the type of company and its scope. Business brokers formulate documents and agreements, inform and keep in touch with the seller, the buyer, banks, accountants, and lawyers. In other words, business brokers coordinate and lead the entire process from a contract to a cash settlement.

They must always work on creating activities that give interest to the company. Oftentimes, they use the web, advertisements in newspapers but above all in the industry press, make mailings, and actively seek out potential stakeholders by letter and telephone, and not least through different networks of experts and old contacts.

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Detailed Tasks

Selling and buying a business or company consists of many parts and is often quite a complex process. A business broker can help with several parts of this process.

Examples of areas in which a business broker can assist are project management of the sales process, guidance, analyzing the business (identifying strengths, weaknesses, opportunities, and risks), developing actions plans before the sale for maximum value, appraisal, production of information material (teaser, prospectus & information memorandum), identifying and finding recruitment candidates, establishing contact with acquisition candidates, structuring the seller’s work during the buyer’s inspection, negotiating, drafting and contracts, and also monitoring and ensuring a correct transfer process.

What Makes a Good Business Broker?

The high competition in today’s world makes selling a business a difficult task and making sure you’re hiring a business broker that is up to the challenge is of the essence. They must be properly licensed and registered and have excellent communication skills. If a person lacks good people skills, they might not have the proper connections which leads to more potential buyers and successful sales.

Before settling on a broker, making sure they have experience with a specific type of business will ensure that the process will be conducted smoothly and in a fair manner making everyone happy in the long run.

 

Final Thoughts

In short, a business broker can be described as a bridge that connects sellers and buyers, helping entrepreneurs sell their businesses. They can also help with things like administrative tasks during the sale process, drafting documents required for the transfer of the company, and also finding the right buyer for the particular company someone is going to sell.

You could thus say that a business broker is involved in one of the biggest processes that an entrepreneur can go through and their ultimate task and objective is to ensure that the result of this process is as good and smooth as it can be.