What Exactly is a Business Broker & What Do They Do?

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If you are someone who is unfamiliar with the buying and selling of businesses, the term "business broker" might be perplexing.   This short blog post will hopefully help you out.

A business broker is professional who has specific training and experience in helping people buy and sell businesses.     If you've ever bought or sold a home, then chances are you've worked with a real estate agent.   You can think of a broker's role being very similar to a real estate agent, however, the broker is helping you buy or sell a business, a more complex endeavor.    Like real estate agents do with homes, business brokers can help you buy or sell a business.

Brokers can play a very valuable role in the process as they provide guidance, advice, and other resources that you may need to make the transaction happen.    Brokers typically have years of training and experience in buying and selling small to medium sized businesses and therefore can provide you expert guidance that can save you precious time and money.    Brokers are well connected with finance professionals, accountants, attorneys, and other professionals who may be needed to facilitate the sale.   For sellers, business brokers can put together the marketing package, help determine the appropriate price for the business, and do all the leg work necessary to market the business for sale.    Even before the business is put on the market, brokers can provide very useful advice to properly prepare the business for sale.   All of these services the broker performs,  allows the business owner to stay focused on what they do best --  running their business.   For the buyers, a broker can present to them motivated sellers and opportunities that meet their particular skills set, passions, and financial objectives or goals.

Brokers typically work on a commission basis -- generally the commission is 10% of the sales price of the business (note this can vary) -- this commission is typically paid by the seller (as it is in the real estate arena).

Like any profession, there are good brokers and "not so good" brokers.   In terms of picking a broker, here are some basic tips that may help you:

- Interview 3 to 4 brokers -- meet with them face-to-face - chat with them about their experience, training, areas of expertise, their rates, their connections with other professionals in the industry,  etc.

- Ask for references -- if he or she is a good broker, they will, for sure, have pleased customers who would be willing to provide a testimonial of their good work.

- Review their resume and credentials -- some questions to consider:  how long have they been a broker, do they have any professional certifications (one to look for is the CBI designation - this stands for Certified Business Intermediary - earned after completing courses and exam by International Business Brokerage Association), do they specialize in a particular industry, how many total transactions have they done, etc.

To find brokers near you who might be able to help you out - visit BusinessBroker.net's Business Broker Directory.

We wish you all the best!   Please let us know if you found this article helpful and what other questions or advice you might have!

Thank-you.

  • Author: Matt Maxwell
  • Date: April 26, 2012
  • Category: Business Brokers
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