Selling Privately vs Selling through Broker

Selling a business can be pretty overwhelming for many reasons. You could be ceasing your business for any reason and your next step is to sell the business. Contracting a business broker is the first option that pops in one’s head when it’s time to sell but since last 5 years many business owners have been selling business privately. Both, selling privately and through a broker have its pros and cons and depending on your business type, you must decide whether you would prefer contracting a broker or selling privately.

Mentioned below are a few advantages and disadvantages of both selling a business privately and selling a business through a broker which will help you make your decision.

Pros of Selling Business Privately

• Less Expensive

This is one of the biggest reasons why any business owner would consider selling the business privately than through a broker as contracting a broker or agent can be highly expensive.

• Online Marketing

Yes, using a broker means that they will make use of many marketing schemes but with a help of internet many business owners have been selling their business privately by linking with potential buyers online.

• Sell the Business To Who You Want

Business owners tend to have their own contacts and may want to sell the business to someone they know and trust. All you need to do is circulate the news through friends and family and buyers will get in touch with you.

• Buyers Feel Comfortable

This is another big advantage of selling privately. Buyers feel way more comfortable with the business owner than dealing with the middle man as you’ll be able to answer their questions and doubts with ease than a broker.

Cons of Selling Business Privately

• Lack of Knowledge

Though selling a business privately can be easy and convenient, it’s not always successful as you need proper knowledge of dealing with potential buyers. There are many documents to be prepared when dealing with clients too which could be a crisis when dealing privately if not prepared.

• Difficult to Find Quality Buyers

Depending on the type of business, it could be difficult to find quality buyers JUST through internet marketing sometimes.

• Time Consuming

This goes without saying that selling a business privately will be tremendously time consuming and if you have a business or other work to deal with, this might not be the right option for you.

• Fear of Disclosure

Since you’ll be dealing on your own it may be inevitable to hide the fact that you are selling your business from employees, suppliers, clients etc.

Consider these points if you are considering selling your business privately:

• Talk to an expert before you finalize on selling privately

• Plan your marketing strategy

• Set aside some capital to invest in online marketing and advertising

Pros of Selling Business Using a Broker

Selling your business using a broker means that your potential buyers will come together as brokers or agents have expertise and various ways to draw a buyer’s attention. Let’s look at a few primary advantages of selling business using an agent.

• Confidentiality

One of the biggest reason business owners use brokers to do this job is due to their commitment to maintain the confidentiality of the business. Business owners need to be particularly careful when selling business as disclosure of information may hamper the performance and their relationship between the employees, suppliers, clients etc. Brokers make sure that they court buyers without revealing the business or owner’s information too soon and even when they do at a later stage; they get the buyer’s to sign a confidentiality agreement for the protection of the business information.

• Experience in Marketing & Advertising

The whole point of marketing the business for sale is so you can get hold of the right buyer. Brokers have the experience and contacts plus the marketing tactics to get your business to spread in the right market to be highlighted amongst finest buyers. Brokers know the places where they can get the buyers to check out your business and know exactly how to advertise which may include online marketing, direct mailers, organizing events and seminars etc. Chances are they will already have information on who is looking to buy which makes the target easy.

• Time Saving

Only a person who has a lot of time can run around talking to potential buyers to crack the deal. Brokers can make this process much easier for you as they know how to handle buyers and will filter the best ones for you. The broker also makes sure to work under your agreed terms and guidelines and will only pass on potential buyers who qualify to save your time.

• Pricing and Negotiation

Brokers evidently have experience in negotiating with buyers and also make a point to rationally close the deal considering your benefits. You may think of the deal on an emotional level and may not be able to negotiate the way a broker will.

Cons of Using a Broker to Sell Business

• Fees

A broker will charge you a fee to provide his services. The prices may vary from broker to broker.

• Lack of Control

Not everything but many parts of this process will be handled solely by the broker and your presence may be required just once in a while when potential buyers wish to be contacted.

• Pressure

In case you go with the wrong broker you may be pressurized to take up an offer that you are not satisfied with.

Consider these points to contract the right Broker for your business:

• Their prior experience of selling businesses

• Choose a broker who has the required expertise and fits your budget

• Talk to a previous client and take a feedback of the broker to make your decision easier