Selling Your Business: Should you Sell Privately or with a Business Broker?

Selling Your Business: Should you Sell Privately or with a Business Broker?

When deciding to sell a business, owners often grapple with the choice of selling privately or using a business broker. Each approach has its advantages and disadvantages, depending on the specific circumstances and goals of the business owner.

Here are some key considerations for each method:

Selling a Business Privately

If you are a business owner looking to sell a business privately it doesnt mean you are going about the process alone. It simply means you are selling a business without the assistance fo a business broker or agent. 

Advantages:

1. Cost Savings: By selling privately, business owners can save on broker commissions, which typically range from 5% to 10% of the sale price.
2. Control: Owners maintain full control over the sales process, including marketing, negotiations, and final decisions.
3. Direct Communication: Sellers can directly interact with potential buyers, allowing for clear and immediate communication.
4. Confidentiality: Some business owners prefer to keep the sale discreet and may feel more comfortable handling inquiries and negotiations privately.

Disadvantages:

1. Time-Consuming: Selling a business privately requires significant time and effort, from marketing the business to managing inquiries and negotiations.
2. Limited Market Reach: Without a broker's network and resources, reaching a wide pool of potential buyers can be challenging.
3. Lack of Expertise: Business owners may lack the expertise to value their business accurately, negotiate effectively, and handle legal complexities.
4. Emotional Involvement: Owners may find it difficult to remain objective, especially if they have a strong emotional attachment to the business.

Using a Business Broker

Business Brokers are the experts in business sales and are driven to get results for their clients. They have to be licensed to operate in Australia. 

Advantages:

1. Expertise and Experience: Brokers have specialised knowledge and experience in selling businesses, which can lead to better outcomes.
2. Market Reach: Brokers have access to a broad network of potential buyers and marketing platforms, increasing the chances of finding the right buyer.
3. Time-Saving: A broker handles the marketing, inquiries, negotiations, and paperwork, allowing the owner to focus on running the business until the sale is complete.
4. Objective Advice: Brokers provide objective advice and can help navigate the emotional aspects of selling a business.
5. Professional Valuation: Brokers can provide a professional valuation of the business, ensuring it is priced appropriately for the market.

Disadvantages:

1. Cost: Brokers charge a commission, which can be a significant expense, especially for smaller businesses.
2. Less Control: Business owners must rely on the broker to handle the sales process, which can feel uncomfortable for those used to managing their operations.
3. Potential Conflicts of Interest: There may be concerns about the broker's motivations, such as pushing for a quick sale to earn their commission faster.

When a buyer contacts a business broker they will have a clear procedure that they follow. This can help guide the buyer through to settlement.  

So which is the best option?

You want to get good advice that can lead to a successful sale. So get advice! Dont just rely on one source, speak to accountants, solicitors and business brokers and make an informed decision that is good for your business.

Tags: selling privately broker

About the author

Vanessa Lovie

CEO Bsale Australia

Vanessa is the current manager and CEO of Bsale Australia. Over the past 11 years as a business owner, she understands what it takes to grow a ...

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