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Are you looking to buy a business? Buying a business often involves a significant amount of money, and you need to be sure you are making the right move. Here’s a closer look at the benefits of hiring a business broker and how to find the right one.
Benefits of Using a Business Broker To Buy a Business
Using a broker to purchase a business comes with several advantages, including:
Business brokers are informed about the entity on sale.
Pinpointing a business with growth potential can be challenging. An experienced business broker has the necessary connections to acquire this rare information on the ideal company.
Assist in screening potential businesses.
You do not want to invest in a failing business. A good broker will perform due diligence on your behalf to help you make informed decisions.
Handle the paperwork and the legal side of the acquisition.
The broker will help you with the negotiation and guide you on the legal requirements in the business purchase process.
Assist in getting financing.
If you need financing when buying a business of your interest, you can rely on your broker for advice. Since they have been in the game for a while, they can give you suitable financing options.
Help to obtain relevant disclosures from the seller.
This way, you can know what to expect when buying the property.
A business broker will negotiate the price on your behalf.
Agreeing on the cost of the business can be complex and daunting. Your business broker will act as your advocate and ensure a successful closing.
How To Choose a Business Broker
Here are fool-proof tips to help you find a business broker when buying a business.
Use Referrals, Recommendations, or Newspaper Ads
Like other purchases and hires, referrals play a pivotal role in your choice. If you are looking to find a business broker you can trust to help you purchase a business, ask a trusted business associate or friend for a referral.
You may not have confidence in your transaction if you do not trust your broker. Ask your lawyer, accountant, colleagues, or even your industry association for leads to proven business brokers. The business section of the newspapers often has reliable leads as well.
Look at the Brokers’ Professional Memberships and Certifications
The International Business Broker's Association (IBBA) is a global community of brokers. IBBA is an umbrella of over 1,000 business brokers spread across the world.
If your potential broker is a member of the IBBA, it's a sign of a reliable and reputable professional. You can even narrow down screening to the Certified Business Intermediaries (CBI). Members of this professional body are reputable for upholding high standards when dealing with their clients.
Analyze Your Potential Broker
If you want to find the right business broker, you should be willing to do your due diligence on the broker before you hire them. Investigate their background, business brokerage experience, and professional credentials.
Check if the broker has any complaints or lawsuits against them. Go to the Better Business Bureau and examine their references as well. Find out if the broker has helped similar clients before to buy their businesses and their experience in their sector. This way, you can be confident they will be helpful in your business purchase experience.
Look For a Dedicated Business Broker
You can always expect a full-time business broker to add more value to your pursuit and purchase of a business than a part-time broker. Dedicated brokers often have numerous valuable contacts and better understand business valuation.
If you want to buy a business worth millions, you might want to look for a broker specializing in mergers and acquisitions. IBBA's ethics code will also come in handy as a valuable reference tool when doing your search.
When using the tool, focus on full-time brokers with considerable experience and recent achievements. Go for a business broker with more positive client testimonials and fewer complaints and lawsuits.
Avoid Business Broker Pressure
Do not make any rushed decisions. The purchase of your business is a huge step that involves complex transactions. Be patient and take your time to understand the business you are considering.
Remember that the business brokers have a fiduciary obligation to you and must be prudent when handling the transaction and your financial decisions. Avoid business brokers who are putting profits ahead of your investment soundness.
Why You Should Buy Your Business With Beacon
For even more professional help in buying the business of your dreams, join Beacon's buyer program. The buyer program is a worthy alternative to using a traditional broker to buy your business. Beacon will help you with everything from business search and deal review to providing legal templates and financial tools you need.
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Will is responsible for helping sellers market their businesses to prospective buyers and providing hands-on support from offer to close. Using his background in mergers and acquisitions at Wells Fargo, he drives value and provides clients with the necessary resources, best practices and advice for a successful sale of their business.
Information posted on this page is not intended to be, and should not be construed as tax, legal, investment or accounting advice. You should consult your own tax, legal, investment and accounting advisors before engaging in any transaction.
Calder Capital
Sam Domino