Are there four benefits to hiring business brokers to sell your business? Well, yes and no.
For all of the reasons we described in What Are the Downsides of Working with A Business Broker to Sell Your Business in Baltimore? there are some serious drawbacks to consider when working with a broker.
But do those drawbacks mean that you should try to sell your business yourself? Not necessarily. There is huge value in having an intermediary between you and prospective buyers. That intermediary could be an investment banker or an attorney who specializes in mergers and acquisitions or business transfers or, working with either of those, a financial planner or CPA who has worked with clients on business sales.
Perhaps the better question is: What are the four benefits of involving an intermediary in the sale of your business? We’re so glad you asked.
The Benefits of Using An Intermediary (Like a Broker) When Selling Your Business
Benefit #1: You’ve Got One Shot and One Shot Only
Unless you plan to be the owner of multiple companies over your lifetime and become a “serial seller,” you’ve got one chance to get the sale of your company right. Usually, prospective buyers either have professional representation or they’ve been to a closing table more than once. Do you really want to cross swords with experts without any experts on your side of the table to protect your interests? Before you answer that question, remember one very important thing: the sale of your business is likely the most significant financial transaction of your life.
Benefit #2: Confidentiality Matters
It is the intermediary’s job to tell the story of your business, answer questions from all interested buyers, coach you (and your management team, if applicable) on what to say to buyers and when, defend your asking price, persuade buyers that your company has nowhere to go but up and that they are just the ones to make it fly. Using non-disclosure agreements and virtual data rooms, they do all this while keeping your company’s identity confidential. Are you prepared to handle all that?
Keep in mind that if your employees, vendors or competitors get wind that your company is for sale, there will be consequences. Employees rarely feel any loyalty to a “company;” instead, their loyalty is to you. If you’re headed out, many employees do the same. And your competitors? They’re only too happy to spread the word that your company is “going under.”
Benefit #3: Focus on The Bottom and Top Lines
Buyers don’t dig deep into their pockets for companies with static or decreasing cash flow. They want companies on an upward trajectory with room to grow. Is it realistic to think that you’ll be able to keep your focus on growing your business while juggling calls from buyers and supplying the mountains of information they will require before they are willing to sign on the dotted line? In our experience, even the most disciplined owners find it impossible to manage the sale process while maintaining company profits and growth.
Benefit #4: The Emotional Buffer
Business brokers and investment bankers have a saying about the deal process, “If a deal doesn’t run into the ditch at least once, it isn’t a real deal.” In our experience, no sale process proceeds without a hiccup from the initial expression of interest to the closing table. There are too many moving parts and too much on the line to expect smooth sailing from beginning to end when selling your business in Baltimore.
Think of it this way, you expect a seller who knows nothing about your business on Day 1, to bring hundreds of thousands (if not millions) of dollars to the closing table just several months later. Of course, buyers are going to ask questions, lots and lots of questions. As you answer a buyer’s questions for what feels like the sixteenth time, you’re going to begin wonder whether they trust you and whether this is the right deal for you. When your buyer argues for a reduction in your purchase price (and they will), are you going to be able to evaluate that argument objectively?
Unless you are super-human, the answer is no. None of us can. That’s why having an intermediary—a business broker or investment banker or mergers and acquisitions attorney—who can look at every buyer request objectively and formulate persuasive, non-emotional responses is so critical. The intermediary you choose should be an expert in pulling deals out of ditches and putting them back on track to closing.
But Who Is Looking Out for You?
We’ve worked with some great transaction intermediaries over the years and they’ve gotten our clients some great results. How do we know? Well, “great” is not just a function of the number of commas in a purchase price. We know that the results of a transaction were “great” because we sat down with these owners before they even started looking for a business broker or investment banker to figure out what they wanted from the sale of their companies. We sat down with them with no stake in whether they sold to a third party, their co-owners or their children.
Unlike transaction intermediaries (like brokers), our purpose is not to close deals that just sell your business quickly. It is to help our clients understand what they need from the sale or transfer of their companies. That’s why we help our owner-clients decide:
- How much money they need—after they leave their companies—to live the post-business lives they desire.
- What type of successor (third party, key employee, family member, co-owner, etc.) they wanted sitting in their corner offices after they leave.
- When they want to leave.
Our owner-clients define a “great transaction” as one that meets all of their goals; the most important of which is financial security for themselves and their families for as long as they will live.
Sell Your Business the Way that Best Benefits Your Future: Work with Someone Who Gives You Options
These four benefits to working with transaction intermediaries point out great benefits when trying to sell your business through a broker in Baltimore. But when working with something as precious as your future, you’ll benefit from something they can’t provide: options.
If you are interested in defining your “great transaction” with someone who has no vested interest in whether you sell to a third party, please give us a call. We’d be happy to help.
