Blake Taylor
What Is the Best Way to Sell a Profitable Business?
Selling a profitable business is one of the most significant financial decisions you can make as a business owner. A …
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Selling your business without a broker saves you commission fees and offers more control over the process. However, you risk undervaluing your business and proceeding with ineffective schedules. The fees can be worth it for a smooth and successful sale. Some brokers, like Synergy Business Brokers, don’t charge you anything until the sale is successful.
Weighing the pros and cons of selling without a broker should help. Understanding a broker’s role can also help you learn their benefits. Use this article as your guide in making your decision.
Business brokers sell companies to qualified buyers, ensuring you get a fair agreement. They often specialize in specific industries, like technology, manufacturing, construction and health care. This industry knowledge helps them understand your business, market and the right buyer for your needs. They only qualify serious buyers with financial resources, saving you time and effort.
Business brokers also have the financial, negotiation and interpersonal skills essential for a successful sale. They work with other professionals, like attorneys, to protect you from liabilities. Confidentiality agreements also prevent potential buyers from disclosing sensitive information. This safeguards your business interests, which is hard to ascertain when selling on your own.
As a quick overview, selling with or without a broker can give you:
| With a Broker | Without a Broker |
| Professional business valuation | Potential bias and undervaluation |
| Wider access to a network of buyers | Limited buyer network |
| Confidentiality agreements | Unprotected selling process |
| Skilled professional services | Reliance on personal skills |
| Efficient sales process | Potentially time-consuming process |
You know your business like the back of your hand. You also understand your market and who may be interested in purchasing your business. With these in mind, the following benefits make it enticing to sell without a broker:
Because you’re not opting for professional services, you get to keep all the earnings from selling your business. Broker fees vary — the cost can range from 5% to 15% of the selling price. Fees may include:
The amount depends on the complexity of the work involved. For instance, accounting fees can cost a few thousand to tens of thousands of dollars. Success fees can be a fixed fee or a flat percentage and can increase or decrease depending on your business’s value.
If fees are the only reason you want to sell on your own, consider business brokers who don’t charge anything up front. For instance, Synergy Business Brokers will only charge you after a successful sale.
Selling on your own gives you more freedom to choose a buyer. Maybe you already know somebody interested, such as a trusted employee, family member or even competitor. You may also have casually agreed on an asking price. This makes working with a business broker seem unnecessary. Business brokers may even deem the people you know as unqualified.
However, prospective buyers often ask many questions. When selling on your own, you should be able to answer business inquiries and support them with appropriate data. Business sales fail due to undisclosed issues. Some sellers get caught up in the complex questions, often part of due diligence. You may also need to expand your network if you prefer buyers who align with your goals.
Without a broker, you have full control over the sales process. You engage directly with the buyer, set your own pricing and negotiate. Selling a business can be complicated, however. Even if it’s a small business, you should be meticulous, understand the legal complexities involved, and be able to meet the deadlines. If there are multiple potential buyers, you need to cater to them on your own. It takes effort to review different terms and negotiate with multiple parties.
There are more drawbacks to selling your business on your own. Here’s what you need to watch out for:
Selling on your own can result in losing more money than hiring a business broker if you undervalue your business. Pricing too high also discourages potential buyers. You may have an emotional attachment that inflates the price. You may also miss financial aspects that skew your valuation. Without a business broker and a professional valuation, it’s hard to identify your company’s real worth.
Business brokers offer a wide network of potential buyers. Because brokers specialize in certain industries, finding a buyer who understands your company’s goals can be easier. Without a broker, you’re limited to your network. You may end up convincing people to buy your business, rather than finding an already interested buyer who’s a perfect match.
Selling a business can take three to 12 months or longer if you handle the process on your own. Instead of focusing on your business operations and ensuring its continuous growth — which affects the selling price — your attention will be diverted to buyer inquiries and document preparations. Planning, advertising, negotiating and closing the sale by yourself slows the process compared to working with a team of professionals.
Business brokers and the professionals they work with offer expert guidance. Without them, it’s easier to miss details that can lead to liabilities. Attorneys ensure the purchase and sale agreement reflects your deal terms, from the discussed pricing, payments, warranties and other contingencies required for the sale. They also create disclosures and help you understand your obligations to mitigate risks.
Additionally, buyers may work with an attorney to negotiate terms. A business broker can help resolve issues hindering the sale’s progression.
Given the drawbacks of selling on your own, here are reasons why you may consider working with a broker:
A fair business valuation stems from data and market research. To avoid bias and unrealistic expectations, you need an impartial view of your business. This can be difficult to achieve on your own. Different means of business valuation that brokers use include:
A scalable business model, strong customer base and effective marketing also add to your business’s worth. Business brokers will try to understand your company from different angles to learn your competitive edge and growth opportunities. You should also share all necessary business information for a more realistic offer.
A confidentiality agreement protects your business. It prohibits potential buyers from disclosing confidential information, which can include:
Leaking such information can harm your business reputation and affect its market value. It can also impact team morale, especially if employees are not informed about the sales process. Malicious competitors can also take advantage of such information, impacting your business’s outlook.
Opting for a confidentiality agreement doesn’t finalize your decision to sell. It only starts the conversation, where you can discuss your business more.
Business brokers are skilled professionals with negotiation and selling expertise. They can help you review several offers and identify the best ones. Negotiations may cover the price and payment terms, the length of the transition period, due diligence and long-term plans for your business. There may be back and forth between your business brokers and attorneys and the buyer’s attorneys.
Also, business brokers can belong to associations that uphold ethical standards of conduct and professionalism. Synergy Business Brokers, for instance, is part of the International Business Broker Association (IBBA), the largest business broker association worldwide. Such organizations ensure you get reliable and trustworthy service, so you know your business is in the right hands.
Business brokers have continuing relationships with many buyers and business owners. This offers you a larger network of screened, possibly more reliable buyers, compared to someone you would meet on your own. This also protects your time from seeking curious buyers who are not fully committed to purchasing a business. Business brokers can spot the warning signs early on. They ensure you share confidential information only with those who are qualified and have your business’s best interests in mind.
Unlike selling your business on your own, business brokers work with professional teams and handle deadlines effectively. Because they sell companies full-time, you can focus on your business operations and leave the bulk of the tasks to them. You only need to provide the necessary information and documents. You won’t even need to worry about marketing your business.
With Synergy Business Brokers, you won’t be contacted unless the buyer is a good fit. We’ll handle the inquiries on our end. Business brokers also review multiple offers at a time, speeding up the entire process.
The following questions and answers can further help you understand the benefits of working with a business broker:
One of the most common mistakes in selling a business is having unrealistic expectations. It’s understandable to be optimistic about your company’s worth. However, an overpriced amount can steer away buyers and lengthen the sales process unnecessarily. While you can try to have an impartial view of your business, business brokers can offer a realistic asking price that gets you the earnings you’re looking for right away.
Working with business brokers is the ideal way to sell your business, whether you own a small business or a large enterprise. Although a large company’s complexities make the decision a no-brainer, small businesses can still hold plenty of value you may overlook without the help of professionals. Business brokers and the professionals they work with can accurately value your small business assets, including intangible assets, like intellectual properties, brand presence and future revenue.
You can still sell your business even if it’s not currently profitable. Every business owner faces financial challenges, but the present doesn’t always dictate potential. Potential buyers may still see your business’s:
Learning how to sell a business yourself can be time-consuming. The risks, like potential liabilities and undervaluation, also outweigh the benefits. Instead of doing it all on your own, you can count on Synergy Business Brokers to make the selling process easier.
We have over 20 years of experience selling businesses and are ranked as one of the top 10 business brokers nationwide. With our database of over 40,000 active potential buyers, we can help you find the right one for your company. Our appraisal also ensures you get a fair market price and that the contract terms are in your best interest. The best part? You only pay when we make the sale. If you own a business with $700,000 to $250 million in revenue, get a valuation today to get started.
