During this article we will guide you through the stops of how to sell a small business without a broker.
If you want to sell your small business however you do not have the funds to work with a broker follow this quick beginners guide.
A broker's job is to sell things on behalf of other people. In addition to this, a broker may arrange transactions between parties for convenience, after the deal is completed one of these parties will then pay the broker commission.
Brokers exist in many different industries, essentially they act as an agent usually for the seller but sometimes for a buyer too.
Although brokers can exist in a variety of industries, they are most common in the business , financial and real estate world.
Reasons To Sell A Small Business Without A Broker
Selling your business will be a complex and possibly unfamiliar process regardless of the size of the company.
Most business owners are not in the know about the selling process, they have spent their time developing their business rather than learning how to sell it correctly.
There are a number of reasons why a business owner may be considering selling their business without a broker these include;
A Beginners Guide To Selling A Small Business Without A Broker
1. Acquire A Business Valuation
Selling your business will be a complex and possibly unfamiliar process regardless of the size of the company.
Most business owners are not in the know about the selling process, they have spent their time developing their business rather than learning how to sell it correctly.
There are a number of reasons why a business owner may be considering selling their business without a broker these include;
2. Converse With Your Attorney And CPA
All sellers rely on their attorneys and CPA in any business sale, without a broker this will only increase.
Be sure to let both your attorney and your CPA know that you plan to sell your business without the assistance of a broker.
It is important to discuss with them the tax returns, the financial statements and the potential tax consequences.
It is vital to keep in communication with both your attorney and your CPA often and keep the sale moving forward. delaying will ruin the deal.
3. Prepare Your Business For The Sale Process
The next step is to prepare your business for the sale process. It is vital to be fully prepared before speaking with potential buyers.
If the potential buyer feels you are unprepared or do not fully understand what you are talking about the deal is likely to fail.
It is important to enter the negotiation stage in a position of strength or you will not win the trust of the buyer, meaning you are less likely to complete the sale.
You will need to come across as a professional and to do this, all necessary documents will need to be gathered for the due diligence stage.
Another important aspect that will need to be prepared before is the financial statements.
This will need to be watertight and you will need to know them like the back of your hand and be prepared for any possible questions that could be fired your way.
This is vital to keep the sale of the business confidential. This is a step that will prove a bit tricky without the use of a broker.
One option is to use a semi confidentiality agreement. This may prove quite difficult without a broker.
To do this, you will need to try not to reveal too much information about the identity of your business.
Work with your attorney to create a non disclosure agreement (NDA) despite the amount of confidentiality you are able to maintain.
Get your potential buyer to sign this agreement before revealing any sensitive or private information surrounding your business.
5. Sign A Letter Of Intent (LOI) With Your Buyer
After completing all of the precious steps and the buyer is interested , you will need to turn everyones thoughts into a letter of intent.
It is very important to get this letter of intent signed before the buyer completed their due diligence.
The due diligence is a long process so it is viral that the letter of intent is completed and signed before this step.
This is because if the buyer properses an offer which is miles away from what you would accept then the whole lengthy process would have been a waste of time.
6. Enter The Due Diligence Phase
This is the buyer's opportunity to request everything they need in order to place an offer. For example, financial statements, balance sheets , tax returns etc.. This is a lengthy part of the process.
This is also the opportunity for the seller to request any other information they would like from the buyer.
7. Final Negotiations And Agreement
Your attorney will complete this final step of the process with the buyer's attorney.
You should expect to be working close to your attorney at this last point in the process.
We hope this beginners guide to selling your small business without a broker has been helpful and has not scared you off the route!
If you follow these 7 simple steps and with the help from your attorney and your CPA you will breeze through the process. We wish you the best of luck!
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