Should I hire a Business Broker?
Throughout the years, I’ve been asked many times “what exactly does a business broker do”?
A business broker or Business Intermediary is quite simply a professional that is trained to help individuals or companies buy and sell businesses. According to the Dictionary of Business Terms (Prentice Hall) by Wilber Cross, a Business Broker is defined as “a person who acts as an agent or intermediary in a sale or other business transaction between two parties.”
Individuals consider hiring a Business Broker simply because they understand that they can get an increased sales price, quicker and with less stress than trying to do it without one.
Once an owner realizes they want to do something other than going to work every day – possibly wanting to be someplace else or are no longer finding fulfillment in what they are doing or that they are close to achieving financial independence or that they would upon selling their business they search for advisors to help them discreetly and successfully exit their businesses.
In terms of the specifics, a business broker typically sells businesses with annual revenues of say $5 million and under (typically under $2 million in annual revenues), and a Mergers & Acquisitions consultant would handle middle-market transactions typically starting at the lower middle market, which refers to the lower end of the economy’s middle-market segment with revenues ranging from $5 million to $50 million. My niche has been serving businesses with revenues between $1 million and $10 million and commercial real estate transactions ranging from around $1 million to under $100 million, and typically sold as part of a business transaction.
Brokers and M&A professionals provide a myriad of services from exit planning to the sale of the business for a variety of reasons, such as burn-out, desire for change, dissolution of a partnership, divorce, health issues, and retirement.
Do Business Brokers need a license?
There is no professional licensure for Business Brokerage however many States and Provinces require a real estate license to facilitate the sale of a business. In Colorado, if the transaction involves a leasehold interest, you must possess a real estate Brokers license. According to the Colorado Real Estate Manual, a broker is “a duly licenses person, firm, partnership, limited liability company, association, or corporation who, in consideration or with the intent of receiving such compensation, facilitates a real property transaction for another party. (See 12-61-101 C.R.S). When we sell real estate that is involved in a business transaction, a brokers license is required in Colorado.
In fact, any person who engages in real estate transactions in this manner as an agent for another individual must obtain a license in the state they practice. Colorado is a single-licensed state so you become a real estate broker and not a real estate salesperson.
Why should I consider hiring a Business Broker?
In addition to an increased sales price, quicker sales, and less stress, a Business Broker (especially a Certified Business Broker) quite simply has the expertise in this area that most CPAs, lawyers, and realtors do not. A Business Broker allows you to focus on your business while the broker is busy with assessing the seller’s objectives, creating a business analysis and valuation package, develop and implement a customized marketing plan, documentation prep, provide regular status updates, pre-qualify all potential buyers, negotiations, deal structure, financing, managing the due diligence process and ensuring the deal is successfully brought to a close – all while maintaining confidentiality.
In addition to my real estate brokers license, I am a Certified Business Intermediary, which offers the most experienced professional representation available for selling your business.
If your thinking of selling either now or just beginning the planning of your exit strategy, contact for a free strategy session here or by calling me directly at 720-436-1472.