Whether you want to buy an operational business or sell your existing company, the process from start to finish is an elaborate maze of paperwork and legal hurdles that can become overly complex for many people. The buying and selling process requires coordination and a myriad of disclosures and documents that must be filed and presented in order to comply with local, state, and federal requirements.
Despite having a keen sense for the details of running a business, most business people do not have the knowledge necessary to negotiate all of the hurdles necessary to buy or sell a business. For this reason, the business broker has become a vital part of any business purchase decision for savvy business owners.
When very large companies are sold or merged with another company, an entire team of acquisition specialists are brought on to handle the details of the merger. When smaller companies are purchased or sold, it is the business broker that handles the same tasks only on a smaller scale.
The business broker can be utilized by either the buyer or the seller of the business, depending on the needs of the business owner. While the broker does not have all of the authority granted in a power of attorney, they do act as representatives of the buyer or seller in all aspects of the acquisition short of signing the final documents.
Business brokers provide a valuable service to both buyers and sellers. Brokers will often be employed by a selling business to list the sale of the company through the Multiple Listing Service (MLS). This enables a broad spectrum of potential buyers access to the sales information of the business. Likewise, a broker who works for a buyer has access to the MLS listings of all businesses that are for sale, so they can tap into that database to find an appropriate business for their client in a short time span.
Business brokers are also constantly measuring the business market and thus have a solid idea of the potential value of a business and are able to give a Most Probable Selling Price valuation to their client.
This can help both a seller and a buyer determine a fair market value for the business without any guesswork.
Once a business acquisition enters the negotiation phase, the business broker becomes invaluable. They can act as a liaison between the buyer and seller and often help to smoothen out differences between the two parties. The other main value of a business broker is understanding the steps that must occur from the start of the business sale to its conclusion and all the various paperwork that must be completed and properly filed.
It is important to note that a broker will garner privileged information about the business while conducting the transaction. To eliminate any potential misuse of this information, business brokers will sign a non-disclosure agreement that binds them to secrecy during and after the sale of the business is completed.
The utilization of a business broker is becoming a popular practice for both buyers and sellers of businesses. The business broker has specialized skills in the area of finding, evaluating, and helping business people buy or sell their business. Brokers save individuals a great deal of time and stress by having solid knowledge of the sales process and taking over a large portion of the confusing details of the process. Brokers have the skills required to tactfully negotiate with all the interested parties involved in the business deal, and many times, they can smooth out problems before they arise. If you are considering purchasing or selling a business in the near future, utilizing a business broker should definitely be a consideration.
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