Since business brokers operate under the radar, many people don’t know who they are and what they do. If you are curious to know, business brokers are intermediaries who work with both buyers and sellers in order to facilitate the sale of small and medium size privately owned businesses.
For you to be a business broker you need to have the right level of education. For example, you must have a business background. You must also have attained business brokerage training from a recognized professional body such as the American Business Brokers Association.
Functions of business brokers
The brokers perform many duties such as:
- Valuing a business
- Marketing a business that needs to be sold. While they advertise the business, they maintain strict confidentiality. For example, they don’t mention the exact business that is being sold. They also don’t mention the owner of the business.
- They introduce prospective buyers to the business
- Facilitate meetings between buyers and sellers
- Handle negotiations between the buyer and the seller after an offer has been made
- Schedule and facilitate the closing of a transaction
- Draft a confidential business review. The document is very important and is provided to prospects after they have signed a confidentiality agreement.
How brokers work
The professionals usually work with commissions. This means that they get a commission after selling a business. In most of the cases, the commission ranges from 8 to 12%. Most of the brokers charge a 10% commission; however, when the business being sold is small, the commission is usually higher.
How to work with a business broker
The first thing you need to do is to ensure that you hire the right broker. This calls for you to do a lot of research in order to identify a reputable one. Some of the things that you should look for when hiring include: experience, professionalism and specialization.
Once you have found the right professional you should give him/her all the details that he/she needs to work. For example, if you are interested in buying a business, you should give the broker a list of all the types of businesses that you are interested in. You should also mention the amount of money that you are ready to invest.
From the above information, it’s evident that business brokers have a role to play in the buying and selling of businesses. To ensure that you are on the same page with the broker, you should regularly communicate with him/her.