Do I really need the help of a business broker?

The short answer is “absolutely not.” Many entrepreneurs got to their station by being Mavericks–rogue and bold independent personalities who took risks and ventured out beyond their immediate realm of understanding. Because this is the case, many business owners feel they are capable of learning just about anything when it comes to business sales, marketing and even M&A. However, the intent of this article is not to tell you that you can’t or even shouldn’t act as your own corporate M&A advisor. The intent is to open your eyes to a few of the reasons it may be wise to utilize a certified and professional brokerage firm when selling your business.

Is Business Brokerage Part of Your Core Competency?

Perhaps you have owned several businesses and have gone through the process of buying and selling businesses previously. This would mean that brokering a deal such as what you may be attempting in the future is “old hat” for you. You’ve had the experience and know enough to do some damage. This may be true for a select few business owners, but these type of individuals seem to be few and far between. For most, their business has been their obsession and they may not have had time to develop greater competencies above and beyond their particular business.

If this is the case, using a merger and acquisition professional is probably going to be a very good idea.

Can you get top dollar for your business?

Business owners often know what it has taken to build their business. And after they have gone through an extensive business valuation process, they know what their business is worth on paper. Even if the owner was able to put together a meaningful prospectus herself, it doesn’t mean that the she will be able to get top dollar. It is interesting that sometimes business owners–because of pride issues–are unwilling to have help putting their business on the market for sale. This is perhaps going to be the best decision you ever make. Think for a minute about the fees for selling the business. There is generally a required monthly “retainer” which is paid out regularly until the business is sold. There is also a commission fee structure which can range anywhere from 2% to 5% of the closing price of the business, depending on the type, size and nature of the transaction itself. With these fees associated with brokering the deal, many company shy away thinking to themselves, “I’ll just save some money.” This is generally unwise.

Most broker firms, at least the reputable ones, can generally get more out of your company than you initially could, making up the difference in the sale of the business. This also does not take into account the fact that you were not required to put in the time yourself to put the business up for sale (i.e. building the marketing and financial materials, contacting potential buyers, and marketing the business in a myriad of other ways). Contacting a merger specialist is not only in your best interest for stress reduction, but also for return on investment.

Do you have the time?

Even if you know the ropes and have the wherewithal to be able to sell your business to the right industry-leader looking to acquire a company just like yours, do you really have the time to do so? Most, if not all, entrepreneurs are very driven, motivated and busy individuals whose lives are consumed by tasks, projects, meetings and strategy implementation. Any good operator knows how to focus on his/her own core competencies and outsource the rest. In the end, trying to go-it-alone can prove “penny wise and pound foolish.”

So you can certainly sell your own business. It is a definite possibility. However, when you do so, keep the aforementioned questions in mind. If you answered “no” to all of the three questions, it may be wise to reach out to a certified M&A professional. If you feel you have the time, energy and knowledge to make it happen on your own, then go for it. Not many business owners do, but for those who are able, selling your own business, without the need of a broker, can be a great idea. For those who don’t, it may be wise just to suck it up and call a broker.

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Nate Nead
Nate Nead is a licensed investment banker and Principal at Deal Capital Partners, LLC which includes InvestmentBank.com and Crowdfund.co. Nate works works with middle-market corporate clients looking to acquire, sell, divest or raise growth capital from qualified buyers and institutional investors. He is the chief evangelist of the company's growing digital investment banking platform. Reliance Worldwide Investments, LLC a member of FINRA and SIPC and registered with the SEC and MSRB. Nate resides in Seattle, Washington.
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