Business brokers mediate the sale of small businesses, assessing their value, setting a sale price, and advertising the sale to interested parties. They can operate independently or join a franchise or brokerage firm. Corporate brokers often act as transaction brokers and employ a screening process to protect potential buyers. They focus on selling private companies while maintaining confidentiality to ensure the best possible price.
Business brokers are professionals who serve as a point of communication when selling a small business. The broker mediates the transaction by working with the buyer and seller to develop the terms and conditions governing the completion of the sale, including the purchase price. Sometimes referred to as a business transfer agent, a small business broker handles the process of assessing the value of the business, setting a sale price with the current owner and advertising the sale to interested parties. In many cases, brokers do not disclose the identity of the seller or company until they enter deals.
Corporate brokers usually have a background in finance or real estate and receive additional training from state or national associations in their home country. The training is normally oriented towards the achievement of two objectives. First, the courses help establish and define the standards that the broker should meet in every business transaction. Second, the information contained throughout the course ensures that the broker is exposed to all data that can be found on written exams required for licensure. After initial training, many associations offer continuing education courses that help commercial brokers stay abreast of the latest changes in government regulations and aid in the continuous improvement of their skills.
Anyone trained as a business broker can choose to operate as an independent broker or join a business broker franchise or brokerage firm. There are advantages to both situations. Independent business brokers are often able to pick and choose clients, making it possible to specialize in selling companies within a specific industry. Corporate brokers who choose to work for a brokerage house can deal with a wide range of clients, but usually have more resources at their disposal than independents. The training and licensing process is usually the same in both scenarios.
Broker franchises can be local or regional, providing services to buyers and sellers within a relatively small geographic area. Others, such as Sunbelt Business Brokers, operate on a global scale, maintaining multiple offices in many countries around the world.
In some areas of the world, corporate brokers also act as a transaction broker. This means that the broker essentially works with two clients simultaneously, the buyer and the seller. Most commonly, a commercial broker is most closely associated with the seller, although the broker is also likely to have some degree of interest in the buyer’s satisfaction.
As part of the process of protecting potential buyers for a small business, business brokers often employ a screening process. The process generally involves verifying the buyer’s financial ability to pay for the business. This helps weed out buyers who either don’t have the resources to acquire the business or who aren’t particularly serious about arranging a deal. Qualified potential buyers allow the broker to focus their energies on worthy prospects instead of wasting time on negotiations that are likely to go nowhere.
For the most part, corporate brokers focus on selling private companies. By keeping the name of the business and the owner confidential, the broker prevents his client from being negatively impacted by word on the street that the business is for sale. This preventive measure helps ensure that the seller receives the best possible price, while maintaining full consumer and market confidence in the company while looking for a new owner.
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