Businesses for Sale

Overview

When a business is sold, there are some definite objectives in the minds of the seller. These objectives could include reasons like the business owners deciding to retire, wanting to start a new business with better prospects, or trying to get some quick capital to avoid an imminent financial disaster such as foreclosure or bankruptcy.

How it Works

Selling an established business is not an easy job. There are many factors that need to be considered. There are brokers who help in selling businesses with profitable deals. Brokers charge a commission for the process and are ideal only if the business that is being sold qualifies as a small business. However, if the business is a big business, then the sale will entail several complicated formalities. For such business sales, a team of lawyers is usually appointed so that all the legal aspects get covered correctly.

Benefits

Small businesses prefer using brokers because they can take up the entire responsibility involved in effecting the sale. Seasoned brokers have knowledge of various aspects of business sale, which small business entrepreneurs generally do not have. These brokers will maintain confidentiality on matters related to the sale. They come handy for the appraisal process, and also take care of the advertising. Other duties that brokers perform during business sales include acting as a contact person for the owner, checking the prospective buyers' credentials, bringing in prospective buyers for the business, and negotiating best offers.

Costs

There are three basic ways in which business brokers will charge the clients whose businesses they are selling. Their compensation can be in the form of hourly modes of payment, a lump sum amount on the success of the sale, or a retainer salary. The fee paid on a successful sale is quite substantial because brokers are expected not just to bring in a prospective buyer, but also to negotiate for the best deal and assist with the transfer of funds. In such situations, brokers can get anything from five to 12 percent of the total sale proceeds. However, in most cases, brokers are paid using a combination of methods for practical reasons. With such arrangements, sellers might retain brokers for a salary, and then pay them some fees when the sale has been successfully closed. In north US, the brokerages paid for successful business sales depend on the kinds of incomes that the businesses make. The costs incurred are more for businesses that generate revenues between $100,000 and $1,000,000. When the business is small, the stakes are lower and hence the commissions are also lower. In such cases, business sale brokers are paid brokerages between 8 percent and 12 percent.

Timing

In the current scenario, many businesses are floundering and are finding it difficult to continue running. This has led to a demand for business sale brokers. Also, people usually decide to sell their business when they want to start a more lucrative business, or if they want to retire.