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

by Vanessa Lovie 6th of April, 2023
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.

 


So which is the best option?

  
The decision to sell a business privately or with a broker depends on various factors, including the owner's expertise, time availability, budget, and comfort level with handling complex transactions. Business owners should weigh the pros and cons of each approach and consider their specific situation to determine the best path for selling their business. Consulting with professionals, even if not hiring a broker, can provide valuable insights and help make an informed decision.

 

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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