Monday, 20 August 2012

Top 7 Ways Business Brokers Add Value

Business brokers act as an intermediate agent between buyers and sellers of businesses. Their main role is to set up the initial contact and then negotiate the best deal for both parties. 

Axis Partnerships are specialist business brokers with many years of experience in helping buyers and sellers broker business sales.

When it comes to buying or selling, specialist business brokers are often the first place to look for help and guidance. But do you really need specialist business brokers if you are buying or selling a business? What value do they add to the process? Could you do it all yourself? In this article we look at the top 7 ways specialist business brokers add value to the buying and selling of a business.

1. Confidentiality
One of the highest priorities when buying or selling a business is confidentiality. Business brokers are able to make initial enquiries without revealing identities. Confidentiality is vital in the early stages to avoid speculation and unease amongst staff, suppliers and customers. The complete confidentiality business brokers can give you also stops rival firms getting to hear of any potential sale or purchase as this information could lead to aggressive marketing to poach custom or a hostile takeover from a large company.

Business brokers can keep the identities of buyers and sellers confidential until the point that each side is ready to enter negotiations. They can arrange discreet meetings off site for seller to discuss their requirements or visit in the guise of a bank manager or insurance broker so as not to arouse suspicion within the company.

Business brokers offer all round general confidentiality in all discussions with sellers and buyers, by using private email accounts and sending all written correspondence to home addresses.

2. Accurate Valuations
Getting an accurate valuation on a business is vital to both a buyer and a seller. Business brokers can offer a no obligation service that can give an accurate assessment of a business’s worth in the current marketplace. For a buyer, knowing a business has been professionally valued gives an assurance that the valuation is based on an objective assessment. And for a seller, having the business professionally valued can help to give realistic information that can be used for planning the owner’s next move.

The industry standard method of valuing a small or medium business is EBITDA, which stands for Earnings Before Interest, Depreciation and Amortization. This ascertains a business’s ‘true’ profitability to potential buyers.

However there are also several non-monetary areas that can help to achieve more well-rounded and accurate valuations.

Business brokers will take many things into consideration when valuing a business and this gives a much truer picture of a business’s worth than if the owner had just put a monetary value on the company based on turnover alone. Past performance as well as projected growth and trends in business are all taken into account. Business brokers know the pertinent questions to ask about customer relationships and client base, competitors in the area, marketing, brand image and future technology in the field to get the most accurate overall assessment of a business’s worth.

3. Market Knowledge
Business brokers will have a wealth of experience in not only buying and selling businesses but often in working within business themselves. They also have areas of expertise where they specialise and this gives them a great deal of knowledge. Business brokers with previous experience in a particular sector will be in touch with what buyers are looking for and this helps them match buyers to sellers more accurately.

4. Pre-sale Assistance
Preparing a business for sale can be as important as negotiating the sale itself. Specialist business brokers can offer this service and advise a seller on the best way to present their business in the market place. This can involve making sure all paperwork and accounts are up to date, there are no legal or staff issues pending that may put a potential buyer off, and that the client base is as broad as possible.

For a buyer, pre-sale assistance includes helping to clarify their requirements and any special features a buyer is looking for in a potential company. Specialist business brokers can discuss with a buyer the kind of business they wish to purchase, whether it is to add to an existing portfolio or to diversify into a niche area.

5. Discreet Marketing

There is a fine line to be drawn when it comes to making the business world aware that you wish to buy or sell a business. Buyers and sellers need to advertise their intentions but discretion is the watchword here. Making your intentions too obvious could cause staff unrest, a dip in share prices or speculation about the financial health of a business.

Business brokers can make discreet enquiries on behalf of both buyers and sellers by marketing out of an area so that employees and competitors are not aware until the owner is ready to reveal their plans.

6. Buyer Contacts
Experienced business brokers will have a network of contacts to call upon when marketing a business. This network of contacts will include a list of interested buyers. This gives a seller immediate access to prospective interested parties.

As a specialist business broker Axis has a list of registered buyers and offers a retained buyer service where companies are researched to match the requirements of registered buyers and approached on their behalf to enquire about a sale.

Buying or selling a business can be a very time consuming job, so by using a business broker who has contacts already in place, this can put you at a great advantage and releases your time to work on your own business.

7. Negotiating Skill

Negotiating a final deal when buying or selling a business is probably the trickiest part of the whole process and one that most people, even those experienced in business, feel uncomfortable in doing.

A business broker can use their years of negotiating skill to help find creative solutions to sticking points along the way and ensure good communications between the buyer and the seller at all times. Ultimately this results in a greater number of successful business sales and acquisitions, with both seller and buyer achieving their goals more quickly.

The Axis Partnership are Business Brokers based in Suffolk, who can assist you with buying or selling a business in the UK. Contact us now for more information and to discuss your requirements.

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