What is a business broker?
What is the job of a business broker?
Sounds fairly basic and straight forward right! But many times a business sale can become extremely complicated. The main job of a business broker is to be a buffer between the buyer and the seller. When a business is transferred, the seller looks at the deal from a single view – their point of view. Buyers typically take a skeptical approach and are attempting to minimize their risk when analyzing the opportunity. It’s similar to a competitive team sport with both teams playing very aggressive defense. The problem with this strategy from both teams is that neither team scores.
The business broker is typically hired and paid for by the Seller but looks at the transaction from both the buyers point of view and the sellers point of view. The business broker is the official, making sure both parties are playing by the rules and the broker gives both parties a level of comfort by keeping the deal moving forward. Knowing that you are dealing with an ethical business broker is of utmost importance.
The commission paid a business broker for the assistance they offer, especially to a first-time business buyers, can more than pay for their fee and increase the the timing and the chances of a sale. According to the International Business Brokers Association (IBBA), 55% of small business buyers are first time buyers. Having a person (the broker) to assist them and support them through the process gives the buyer the direction and confidence to take the next steps forward in the transaction process.
A good business broker is beneficial for the seller and has the experience and know how to qualify the “real business buyers” and has the ability to weed out the so-called “tire kickers”.
The sport of selling a business is not one team dominating over the other but more of win-win for each team (buyer and seller). A business broker plays a key role insuring a level playing field for both parties.