A business broker serves as the communication point when a small business is being sold. The broker facilitates the deal, by negotiating with the seller and buyer to agree the conditions and terms that govern the sale. This includes the price of purchase. Occasionally called a business transfer professional, a business broker evaluates the value of a business, determining a suitable price with its’ existing owner and promoting it to potential buyers. In lots of cases, a business broker will not reveal a company’s or seller’s identity, until the negotiations are well underway.
Business brokers use a range of methods to attract potential buyers. For example, they might place adverts on well known company for sale websites, or list limited information about available companies on their own websites. Sometimes, they might advertise in print media, although this is quite rare these days because word of mouth advertising is more effective. Certainly, brokers will often approach potential sellers and buyers directly to generate interest. The majority of experienced brokers have a big database of prescreened potential buyers – or they will have dealt with other company owners, who they know are still looking to purchase a business. This network of prospects is usually enough to keep most brokers busy.
A broker franchise could be regional or local, catering to sellers and buyers who reside in a fairly limited geographical area. Some business brokers in Los Angeles cater to global clients, running several operations in various countries the world over. In certain countries, business brokers serve as transaction brokers too. These professionals work with a couple of clients simultaneously, the seller and the buyer. Most of the time, the broker and the seller will have a closer relationship, however the broker will still want to keep the buyer satisfied.
Typically, business brokers deal with businesses that have transaction values of under $10 million. Bigger, privately held businesses tend to hire organizations that specialize in M&A (mergers and acquisitions). Nonetheless, business brokers will take part in M&A activities that involve transactions between at least two smaller businesses.
By and large, business brokers concentrate on private company sales. They do not disclose the names of the companies or their owners, to avoid any negative impact from rumors that the companies are being sold. This safeguard allows the sellers to get the highest possible price. It also ensures that the companies retain full market and consumer confidence, until a new owner is found.