What Is A Business Broker

A business broker is an intermediary between a buyer and a seller of a business. In most cases a business broker represents the seller in the sale of a business. It is the business brokers' responsibility to find qualified buyers for their clients.

A business broker is similar to a real estate agent who sells homes and earns a commission. But instead of selling homes, business brokers specialize in selling small and mid size companies -- everything from your local pizza parlor, dry cleaners and convenience store to larger companies, such as manufacturing and wholesale & distribution companies.

A business broker connects people who are looking to sell a business with people who are looking to buy a business, and helps them to complete the transaction. In most cases a business broker is involved from day one until the actual closing of the business. The business brokers' responsibility is to be an intermediary between the buyer, the seller, the landlords and the attorneys and make sure it is a smooth process.

Brokers supply numerous benefits to both buyers and sellers. For example, sellers benefit because they do not have to spend time and money searching for buyers. Qualified business brokers have access to people that are in the market to purchase a business, and they know how to attract and screen potential buyers much more quickly then do typical business owners. If you do not have the time to market selling your own business, it may be a good idea to sit down with a local business broker in your area to discuss representing you in the sale of your business.

Choosing The Best Business Broker

Buying a business today is an involved and complicated process requiring expertise in many different areas (i.e., legal, accounting, tax, business valuation and due diligence). With thousands of businesses available navigating your way to the right one can be an arduous task.

A Business Broker can be a very effective tool to identify, locate, screen and value each targeted business and thereafter, in obtaining financing, negotiating the purchase, coordinating the due diligence and supervising the preparation of all transaction documents through the closing.

In the event you as the buyer attempt to purchase a business without the aid of a broker, realize that the listing broker represents the seller who pays his or her commission. Since most listing brokers will ordinarily not do anything to jeopardize a sale, you cannot rely on the seller's broker to advise you objectively. Never lose sight of that fact!

For most published listings, the listing broker will "cooperate" and "share" the listing, and the commission, with the broker hired by the buyer. In this case, it will not cost the buyer any fees or commissions to obtain exclusive representation.

Once you decide to hire a business broker, seek out a competent professional. The vast majority are unprofessional and quite dysfunctional when it comes to understanding the transaction, valuing the business and providing customer service and support. Furthermore, most business brokers have never owned or even purchased a business or professionally represented or counseled business owners. In California, one need only become a licensed real estate broker to sell business opportunities.

At a minimum, a qualified business broker can greatly facilitate find the right business, especially if the broker is well acquainted with your purchase criteria. Although there are many business listing services, some brokerage firms have software programs that can consider your purchase criteria, investment amount, owner benefits and other factors and produce a more focused and narrow search (see: http://www.qbsnet.com/buying-a-business.php). This can be extremely important. As you will soon find out, unlike purchasing real estate, evaluating a business is a very time consuming process. Therefore, it is important to apply your resources effectively.

So how do you go about finding a good business broker? Our Quantum Business Solutions Network professionals have listed a few essential ingredients in your search for a competent business broker (for a description of the full range of business broker services offered to California business buyers and sellers, please visit http://www.Qbsnet.com).

Before you sign an Agreement

Broker’s profile

The best brokers are affiliated with accredited Associations relevant to their state and profession. For example, in the state of California, the best business brokers are registered with the California Association of Business Brokers (http://www.cabb.org) and the International Business Brokers Association (http://www.Ibba.org).

Make sure the California business broker is qualified to provide competent representation. The firm or the individual should have their own website which is regularly updated with news, articles and business listings. Excellent contact details, company profile as well as having well qualified professional such as accountants, attorneys, etc.

Expectations

The business broker should clearly attempt to understand your exact purchase criteria, investment objectives, background and experience. This will ensure that the broker is not wasting your time and missing viable business opportunities in the marketplace (a good business brokerage firm will maintain its own network of listings, many of which are not “published” and unavailable to the general public). In addition, a competent business broker will continually narrow the focus of the search based upon your constant feedback. There should be a mechanism in place to accomplish this task. Quantum Business Solution Network employs uniquely designed business buyer software which constantly narrows the search and identification process.

Communication

Take some time before committing to a particular business broker and see how responsive he or she is at the outset. Attempt to inquire about the nature and scope of the services offered. Determine if they respond in a timely and comprehensive manner.

The best business brokers are excellent communicators and always respond in a timely manner (in business purchase and sale transactions time kills deals) and often serve an indispensible element toward ensuring the flow of the transaction toward a smooth closing.

The listing agreement/contract should include:

• length of time they will be representing you (6-12 months is typical)






• the type of the agency relationship offered by the broker (you want the broker to serve as your “exclusive” agent)






• the manner and payment of the broker’s compensation






• the nature and scope of the brokers duties

About the Author

Quantum Business Solutions Network is a full service Southern California business consulting and licensed brokerage firm. Quantum Business Solutions Network is comprised of professionals that combine valuation, financial, marketing, legal, accounting, tax and transactional structuring expertise to initiate, execute and consummate business acquisition and divestiture transactions.

Copyright

© Copyright 2007, Quantum Business Solutions Network. All rights reserved.

This Article is Copyright protected. Republishing & syndication of this article is granted only with the due credit, as mentioned, retained in the republished article. Permission to reprint or republish does not waive any copyright. The text, hyperlinks embedded on the article and headers should remain unaltered. This article must not be used in unsolicited mail.

Business Broker Guide- How to choose a reliable Business Broker

Business brokers or business transfer agents are helpful in selling your business at higher prices. A business broker provides buyers as well as sellers for different businesses. You can easily sell or buy a running business with the help of best business brokers. Business broker works like a real estate agent.

Business brokers find buyers for you to make an effective business sale. Hiring business brokers is the better option to gain more offers and profit. You can even get maximum prices for your small business. Business broker can be a person as well as a firm that enables you to sell various businesses that includes Internet businesses as well as website.

Business brokers provide accurate value of the business. They advertise your business for sale and handle all initial discussions with the buyers and also help the sellers to sell their business at good prices. They attract buyers in different ways. They advertise for your business on their websites and manage space in business newspapers and magazines.

Business brokers are very much confident with their work. They work on the behalf of sellers and sometimes suggest them about how to get more profit from business assets. Buyers can also get benefits of business brokers by telling their requirements. They only charge some commission for every transaction. Usually they get charge commission from both buyers as well as sellers.

While thinking about business brokers, very first question that comes in mind, how to choose a right business broker?

There are not specific qualifications of business brokers but the person or firm, that you’re going to hire for your business transactions, should be reliable, knowledgeable, experienced, planned and friendly with you. You should call two or more business brokers for interview and then choose the best among them. You should check whether the broker has great knowledge about the business or not. Just check out their brokerage skill. Always choose a reputable brokerage firm for your business activities.

Business brokers should know how to maintain good buyer-seller relationship. Broker works as a bridge between buyers and sellers. You should check their working ability as well as their common sense. The person who can devote time for your business is the best business broker.

International Business Brokers Association is the leading association of business brokers.

Broken Woes of the Business Broker

Business brokers don’t have it easy. It seems as though many brokers have their stories of how they have dealt with unhappy clients trying to cut out of the deal after escrow is closed. Some business brokers can tell their woes of how they were shorted on their commission, and many will claim that miscalculations are all too common.

Informing the Buyer

Anyone looking to sell their business needs to have as many interested buyers interested as possible; getting the word out is the most important thing to do in the beginning. That way you always have back up buyers if anyone drops out. And as always, the more information you can provide about the business for sale, the more chances you have on it being sold. The less information you provide in your advertisement, the less quality you are presenting to the potential buyer.

Basically the best thing to do is to provide all the information there for the potential buyer. Holding back because it will attract people to inquire more is a big mistake.

Miscalculation

Miscalculating the amount of home equity can be absolutely detrimental to the loan process. The equity is necessary mostly because the lender needs at least some home equity to secure the deal. But it’s necessary to also check out where home prices have dropped because there could be many more homes for sale in the same area because of this. Checking the rates of other homes in the area and comparing helps a great deal in the decision process. If it’s absolutely necessary to use equity to secure financing, you must compare prices no more than six months old.

Financing

Majority of people looking to buy a business are going to finance. Many try to avoid Small Business Administration loans because of how long they take to be processed. It’s very important for business owners and sellers to be involved in the financing process from the very beginning so that there are no surprises around the corner.

Certification

Business broker certification means that you are registered with a government agency. There are several levels of certification, and different types might be required in specific situations. Potential buyers have the ability to investigate the certification of brokers as well. A large brokerage could be certified in general, without the broker checking the certification of the transaction themselves.

When people find a broker who has taken it upon themselves to be certified this is seen as more valuable to the buyer. This is assurance of the broker’s capabilities, and with such large competition out there, can be essential to the broker’s business.

The broker might even be required to demonstrate through a different form of certification that the work was done in the buyer’s best interest, without bringing success solely to the broker throughout the transaction. That being said it’s important to realize that it’s possible to choose a broker who is certified to the buyer’s level of satisfaction, even before the process has begun.