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?

I think its important I premise this article with Bsale’s position. We are a business for sale marketpalce with the goal to generate leads for our clients. This includes business brokers and business owners. In order for Bsale to be a successful business for sale marketplace we have both clientele.

There are reasons people decide to sell a business privately vs with a business broker.

Selling Privately

When you sell a business privately you are basically selling your business without the assistance of an agent. This agent in Australia is typically a business broker, though may be a real estate agent.

In order to sell a business privately you must handle multiple steps in the process, such as:

Prepare your business for sale
Create an exit strategy - how you intend to sell, writing a business memorandum, training periods, negotiation process, settlement.
Obtaining the necessary legal documents such as contract of sale and NDA.
Understand the price you could sell your business for (get appraisals)
Advertise your business for sale, whether its on business for sale websites like Bsale or other avenues such as approaching competitors, clients, employees etc.
Field buyer enquiries
Negotiate with interested parties and undergo due diligence process.

Benefits

When you sell a business privately you are involved in the entire process. This can be a positive or negative depending on the business you are selling and how confident you are with the process. As the business owner you know the most about your business and have the ability to communicate directly with buyers without the involvement of a third party.

You get to see when the enquiries come through, respond in a timely manner and follow up directly with the buyer. Creating a quick connection - business owner to potential business owner.

Save costs from paying excessive marketing fees and business broker commissions. This could be important if you are selling a business sub $300,000 as you want to reap as much of the profits from the sale as possible.

Challenges

Selling a business is not a quick exercise. There are risks involved and finding a buyer may take time.

You need to be committed to the process, be a good negotiator and know how to close the deal. A solicitor can assist you with the legals and negotiation process, but as the owner you need to be ready to walk the path. Getting the most exposure for your business sale is very important.

Listing directly on all the major business for sale websites and applying upgrades will get you the best exposure and set you back less than $1,500.

Selling With a Business Broker

Business Brokers have a specialised skillset. Even though they are registered as real estate agents in most states - they have a very different knowledge base.

Business Brokers can assist with:

Preparing the business for sale
Establishing an asking price (appraisal)
Marketing and writing a business memorandum
Negotiations with buyers
Guide you through the process

There are some very talented Business Brokers that can guide you through the process.

Benefits

The business broker can be there through the whole process.

Whether your 3 months into your sale or 10 months. They are there to assist you. Experienced business brokers will guide you and be excellent communicators through the entire process - connecting the dots between you, your solicitor, buyer, buyers' solicitor, accountants, etc., to get the deal done.

Challenges

Finding the right business broker. It can be a bit of a balancing act, finding a broker who will work with you and your best interests. You don't want to go with a business broker who gives you bad advice, provides you a bad appraisal, gives false hopes, doesn't list on the major business for sale websites - or simply isn’t fully committed to the process.

As the business owner, you need to realise alot of the work also involves getting the business ready for sale - internal systems, increasing profits, tax implications. A business broker is not a magic wand - a business is a separate entity that needs to be well prepared.

So which is the best option?

Like stated earlier, we are biased - we have both clientele. So I won't argue one or the other. If you ask a business broker - they will say a business broker. If you ask a business owner who sold privately or had issues with their business broker - they will say privately. So we stand neutral.

At the end of the day, when you are selling a business. 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