The Role of a Business Broker

Selling a privately held business is a very complex process involving many variables and it is important for the business owner to seek expert advice. By developing the framework for a business exit plan and establishing a specific timetable of actions to be taken, an owner will have a clear plan of action and be in complete control of when and how they will be leaving the business. Understanding the current market value of the business and how that value is derived is critical to projecting the after tax proceeds that a sale would generate and how that number correlates to the funds required for either retirement or pursuing the next venture. In some cases, there are small changes that an owner can implement that would significantly increase the value of the company. Strategic planning coupled with a proven merger and acquisition process can increase the business value by thousands of dollars.

Traditionally, a business owner does not contact a business brokerage firm until the absolute last minute. In many circumstances, as with the case of divorce or failing health, this is unavoidable and a competent business intermediary firm will be able to assist with a timely valuation and sale of the enterprise. For the majority of cases it is critical to engage a business intermediary early. Professionals involved in the sale of businesses have a variety of titles including, business broker, intermediary, M&A consultant, and investment banker. These professionals are largely performing the same function, selling a business, but typically will differentiate themselves as it relates to the size of the business. The specialized knowledge and experience that a business intermediary has is invaluable in all aspects of the process. Selecting a professional who is experienced in valuations, confidential marketing, qualification of buyers, due diligence, and contract negotiations will be critical to completing a successful transaction. Although the economic challenges over the past two years have caused a dip in the prices of some businesses, there remains considerable interest from a wide range of prospective financial and strategic buyers.

Over the years, I have had the pleasure of meeting some incredibly talented, intelligent, and successful business owners and have a true appreciation for the enormous amount of work, time and sweat equity that has been devoted to building their companies. The majority of these owners were able to maximize the market value of their business through the proactive implementation of a strategic exit plan. Historically, a business owner sells only one business in their lifetime and it is the two or three years prior to the business sale that are the most critical. Ensuring that the proper structure is in place and that the financials are organized in a format which compliments the business enterprise and maximizes the value of the company, is a process that, when adopted early, can offer significant financial benefits upon the sale.

Strategic planning in a business sale provides the ultimate amount of control for the owner and, in most cases, the highest transaction value. Engaging a competent business intermediary who brings an experienced exit planning and transaction team will provide both peace of mind and financial rewards when the ultimate day arrives to sell the business.