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Selling a Business – Should I use a broker or go DIY?

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Selling a Business – Should I use a broker or go DIY?

If you’ve made the decision to sell your business, then you’ve probably already started your research into the process involved. From the initial valuation, through advertising, to the negotiations and closure; there’s plenty to think about once you’ve committed to selling your business. In fact, this may be the largest deal you ever make, so ensuring you have a solid grasp of how it works is crucial.

In the past, with the exception of intrafamily sales, businesses were almost always sold through a professional broker. These brokers would take care of the majority of tasks, including marketing and price negotiations, for a percentage of the final sale. However, with the growth of web based marketplaces, it is now easier than ever to complete the process without any external assistance.

Today, both have their pros and cons, and as a general rule, one is more suited than the other depending on the type of business offered for sale. Here then, we take a look at how they stack up against each other, and how you might make the decision as to which approach will help you maximise profit and sell your business successfully.

Selling Your Business – The DIY Route

Taking the DIY route puts all the power in your hands, meaning you have complete control over every aspect of the sale of your business. This approach is ideal for anyone who is clear and confident in what their business can offer a potential buyer.

Initial costs are very low and the DIY route offers lots of opportunity for exposure. In fact, with online marketplaces such as Daltons Business, not only can you create your own free adverts and benefit from a variety of advertising plans, but you also have the potential to reach thousands of buyers.

On the flipside however, inexperienced sellers may have unanswered questions that a broker could potentially help clarify. Here then, we highlight the pros and cons of the DIY route:

Pros

  • Very low cost, more profit for you
  • Quick and simple way to reach thousands of buyers
  • No long term agreements
  • Deal with buyers face-to-face
  • Complete control over the entire process

Cons

  • No one to offer guidance or advice
  • Valuation and negotiations are down to you

Selling Your Business – The Broker Route

Using a broker means that you pass on almost all responsibility for selling your business to a third party. In most cases, a professional will place a value on your venture, advertise your business, negotiate the sale with potential buyers, and deal with any paperwork and legalities.

A significant benefit of this is that you are then free to deal with your day-to-day operations, helping to ensure that your business can run uninterrupted. However, 10% of the profit made is a common charge for this service, and large businesses may also have to pay an additional fee up-front as a retainer.

Here then, we look at a few other advantages and disadvantages when using a broker:

Pros

  • Allows you to concentrate on running your business
  • Takes care of complicated valuation processes
  • Usually has network of potential buyers on hand
  • Can mediate negotiations

Cons

  • Much more expensive, particularly when selling larger businesses
  • You cannot try to sell your business elsewhere
  • No control over the sale
  • Much smaller market exposure
  • Poorly qualified brokers may also simply list online

Conclusion

As internet marketplaces and DIY sales continue to become the norm, you may find that a compromise between the two approaches is possible. For instance, you may prefer to get a professional valuation and then sell the business yourself. Alternatively, you may feel more comfortable valuing your own business but letting someone else negotiate the best deal.

Whichever of these approaches you choose, one thing is certain – by operating efficiently and optimising the profitability of your business today, you stand a much greater chance of selling quickly and successfully. With this in mind, make sure your business is up to scratch before you even think of putting it on the market.

I am the founder of Startup Today. I am the main writer and have put in many hours of work into creating this blog. If you want to find out more about me then lets get in contact.

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