Why Should a Buyer Use a Broker
There are countless reasons why a buyer should employ the services of an experienced Business Broker. The more experienced the Broker, the more effective the Broker will be advocating on behalf of the Client. Brokers with actual experience in operating their own businesses are the Brokers that will provide the most valuable services to their clients. Below are some examples of why an experienced Broker should be used:
* Overpaying – most sellers think their business is worth more than it is. A Broker will use its Valuation expertise to ensure you are not overpaying for a business. An experienced Broker will also provide a valuation on the potential of a busines
* Lost income while searching. Looking for the right business opportunity takes time and effort, an enormous amount of personal commitment. The majority of people simply do not have the time to do this effectively. A lack of time can lead to carelessness. There is no place for Carelessness when making one of the biggest decisions of your life.
* Comparisons/Options - Brokers typically have a number of available Business Opportunities that a buyer can choose from. The more successful brokers have a greater database for buyers to choose from. This improves leverage and negotiating power. It allows the buyer a greater chance of finding the exact business that it is interested in. Without a broker, a buyer is more inclined to decide on a less-than-ideal-business. This will more than likely lead to frustration, and a lack of passion towards the new venture. A lack of passion leads to frustration, and often failure.
* Working capital needed once you start. A Business Broker has the ability to break down the actual investment required, including cash flow, permits, and upgrades. The overall 'purchase price' of a business is often significantly higher than the 'sale price' of the business.
* Due diligence – The most crucial factor in the process of purchasing an existing business.
- Inexperience leads to key issues being missed. A critical and common mistake made by buyers is to attempt to understand the Due Diligence process on their own. Your Business Broker is essentially your auditor. An experienced broker knows what to look for, and will recognize the red flags in a business that is for sale.
- An even more critical mistake is to employ the services of a Real Estate Agent to assist with the purchase of a business. This gives the buyer a false sense of comfort. An average Real Estate Agent does not have the necessary Business and Due Diligence experience, nor the Valuation ability to provide the necessary services required. A Buyer will often receive incorrect advice, leading to irreparable damage.
- Guarantees for business liabilities. A broker will ensure that a buyer is protected from any past business relationships and debts, and starts its operation from a clean slate.
* Money saved, Expertise Gained- The most experienced and successful brokers have an established network of accountants, lawyers, and other professionals. Expert advice is provided at every step in the process, ensuring client satisfaction and saving on additional fees that can become exorbitant.
Don't take our word for it
The majority of reputable Business Magazines recommend Business Buyers use the services of a Business Broker. Entrepreneur Magazine states 'The assistance brokers can offer, especially for first-time buyers, is often worth the cost', and lists the following reasons why one should be used:
Prescreening businesses for you - Good brokers turn down many of the businesses they are asked to sell, whether because the seller won't provide full financial disclosures or because the business is overpriced. Going through a broker helps you avoid these bad risks.
Helping you pinpoint your interest - A good broker starts by finding out about your skills and interests, then helps you select the right business for you. With the help of a broker, you may discover that an industry you had never considered is the ideal one for you.
Negotiating - The negotiating process is really when brokers earn their keep. They help both parties stay focused on the ultimate goal and smooth over any problems that may arise.
Assisting with paperwork - Brokers know the latest laws and regulations affecting everything from licenses and permits to financing and escrow. They also know the most efficient ways to cut through red tape, which can slash months off the purchase process. Working with a broker reduces the risk that you'll neglect some crucial form, fee or step in the process.
For more information on how OConnor Brokers can advocate the most effectively on your behalf, please contact us for a free consultation.