Are business brokers worth it?
If you want to sell your business in California, here are five benefits of working with a broker.
- Get The Best Price For Your Business
- Find The Right Buyer
- Get The Benefits Of Managing The Sell-Side Process
- Get All The Paperwork & Financials In Ship Shape
- Get Advice & Guidance During The Sale Process Of Your Business
If you’re a business owner in California, you’ve probably thought about retirement at some point. And if you’re a retiring business owner, you may be considering the sale of your business. In either case, choosing the right business broker in California can be highly beneficial.
Here’s why.
Get the best price for your business.
One of the main benefits of working with a business broker is that they can help you get the best price for your business. This is because they have extensive experience negotiating deals and a deep understanding of the market. They will also be able to advise you on how to position your business to make it more attractive to buyers.
For example, suppose you own a business in California that you’re looking to sell. In that case, a good business broker can help you understand what buyers will pay for companies like yours in the current market.
Let’s say you are looking to sell your business for $1 million; A business broker can help you understand how to structure the deal so that you get the most money from the sale.
A business broker in California can also help you understand how to calculate the price of your business. This is important because you want to ensure you’re not leaving money on the table by selling for too little, but you also don’t want to price yourself out of the market.
The first step in calculating your business’s price is determining its fair market value. You can do this by looking at recent sales of similar companies in your area.
After determining your business’s fair market value, you will need to calculate the Seller’s discretionary earnings (SDE). This is important because buyers will use it to determine how much they are willing to pay for your business.
The SDE is calculated by adding net income, depreciation, and amortization and subtracting any owner’s salary, benefits, and expenses.
For example, let’s say your business had a net income of $100,000 last year. Depreciation and amortization totaled $10,000, and your salary, benefits, and expenses totaled $50,000. The SDE would be $100,000 + $10,000 + $50,000, which equals $160,000.
The SDE is significant because it determines the multiple buyers willing to pay for your business. For example, if buyers in your industry are eager to pay 2.5 times the SDE, your business would be worth $400,000 (2.5 x $160,000).
A business broker can help you understand what multiple buyers are willing to pay for businesses in your industry. They can also help you negotiate a higher price by showing buyers how your company compares to others in the industry.
Find the Right Buyer.
Another benefit of working with a business broker is that they can help you find the right Buyer for your business. This is important because you want to ensure your business goes to someone who can take it to the next level.
A business broker will have a network of potential buyers they can contact on your behalf. They will also be able to screen buyers to ensure they are a good fit for your business.
For example, suppose you own a small manufacturing business. In that case, you may not want to sell it to a large corporation because they may not be interested in keeping the manufacturing operations in your town.
A business broker can help you find a Buyer interested in keeping the business in its current location and having the resources to grow it.
Manage the process
Another benefit of working with a business broker is that they can help you manage the entire selling process. This is important because selling a business is a complex process with many moving parts.
A business broker can help you coordinate the various aspects of the sale, including due diligence, financing, and closing. They can also help you manage the expectations of both buyers and sellers, ensuring that everyone is on the same page.
Selling a business in California is a significant decision, and it’s not something you should undertake alone. Finding a business broker in California can help you navigate the process and get the best possible outcome for your business.
Sell-side due diligence
Due diligence is an integral part of the selling process, as it helps protect the Seller from liability and ensures that the Buyer is getting what they expect.
There are many types of due diligence, but one of the most important for sellers is sell-side due diligence. In this type of due diligence, the Seller provides information about the business to the Buyer, allowing the Buyer to make an informed decision about whether to purchase the company.
Sell-side due diligence typically includes financial information, such as income statements, balance sheets, and tax returns, as well as other relevant documents. It also provides information about the business itself, such as its products and services, competitive landscape, and growth potential.
Sellers should provide as much information as possible to the Buyer during due diligence so that the Buyer can make an informed decision. It is also essential for sellers to keep track of all the information they provide to the Buyer so that they can protect themselves from liability in case something goes wrong after the sale.
Paperwork and legalities involved in selling a business
A business broker can help you with the paperwork and legalities of selling a business. This includes preparing and filing the necessary paperwork and working with the Buyer to ensure a smooth transition.
Some of the documents that may need to be completed and filed include:
- Sales Agreement
- Purchase Agreement
- Disclosure Statement
- Operating Agreement
- Tax Paperwork
Some of the financial documents that may need to be completed and filed include:
- Profit and Loss Statement
- Balance Sheet
- Tax Return
The business broker will also work with the Buyer to help them understand the business and what they need to do to take over. This includes providing information on the employees, customers, suppliers, and other essential business facets. The goal is to ensure the Buyer is prepared to take over the business and that the transition is as smooth as possible.
If you are selling your business, a business broker can be a valuable asset in helping you navigate the process. They can help you with the paperwork and legalities and work with the Buyer to ensure a smooth transition.
A business broker can provide valuable advice and guidance throughout the sale of a business.
A business broker can provide valuable advice and guidance throughout the selling process. This is especially true for those unfamiliar with the process. A business broker can help determine a fair price for the business and negotiate on behalf of the Seller. Additionally, a business broker can provide guidance on the most effective way to market the company and assist in identifying potential buyers.
10 pieces of advice a business broker can give to a retiring business owner looking to sell their business.
- Don’t underestimate the value of your business. A business broker can help you establish a realistic asking price based on your business’s current value and future potential.
- Get your ducks in a row – Before putting your business on the market, make sure that all legal and financial documentation is in order. This will make the sale process much smoother.
- Choose the right time to sell – Timing is everything when selling a business. You need to ensure that you are emotionally and financially ready to take this step.
- Don’t do it alone – A business broker can be a valuable ally in selling your business, providing advice, guidance, and support.
- Know your Buyer—It is essential to understand your potential buyers well so that you can tailor your marketing strategy accordingly.
- Get expert help—When selling a business, it is essential to seek professional advice from solicitors, accountants, and business brokers.
- Don’t be afraid to negotiate. Never accept the first offer that comes in. Remember, you are in the driving seat and can set the terms of the sale.
- Be prepared to walk away—If a prospective Buyer does not meet your expectations, don’t be afraid to walk away from the deal.
- Be honest – Be upfront about any issues or challenges your business faces. Honesty is the best policy when selling a business.
- Have realistic expectations—Selling a business can be a lengthy and complex process, so it’s essential to have realistic expectations from the outset.
Working with a broker is an excellent option if you’re considering retirement or selling your business. They will help you navigate the process from start to finish and ensure you get the best possible price for your business. So, if you’re ready to take the next step, contact a broker today.
Hire a California Certified Broker to Sell My Business
When deciding to sell your business in California, you will likely have several questions. Here are a handful of other questions that come to mind when you say, “Broker to sell my business.”
- What is the value of your business?
- What should be the price at which you sell it?
- How can you find a Buyer?
- How can you find a Buyer who is interested in buying your business?
The answers to these questions will largely depend on the experience and network of contacts of your chosen business broker in California, who focuses on a geographic location by region:
Northern California
City Population
.Source: Wikipedia
Central Valley California
| SMSA | Population |
| Sacramento Metropolitan Area | 2,527,123 |
| Fresno Metropolitan Area | 930,450 |
| Bakersfield Metropolitan Area | 839,361 |
| Stockton Metropolitan Area | 696,214 |
| Modesto Metropolitan Area | 518,522 |
| Visalia–Porterville Metropolitan Area | 449,253 |
| Merced Metropolitan Area | 259,898 |
| Chico Metropolitan Area | 220,266 |
| Redding Metropolitan Area | 177,774 |
| Yuba City Metropolitan Area | 167,497 |
| Hanford–Corcoran Metropolitan Area | 153,765 |
| Madera Metropolitan Area | 152,925 |
| Red Bluff Micropolitan Area | 63,601 |
Source: Wikipedia
Therefore, consider hiring a qualified business broker near you to sell your business in California.
Final Thoughts By Andrew Rogerson
Selling your business is a life-changing event, so it’s essential to plan for it carefully.
If you’re listing a business for sale in California, you’ll want to find a reliable business brokerage firm. At Rogerson Business Services, a team of experienced professionals works to plan and execute the buying and selling business processes in California.
You can also consult Andrew Rogerson for guidance on increasing your overall value.
List of Resources That You Might Find Helpful
- Selling your business
- Get started on a seven-step process of selling my business.
- Get a business valuation
- Get started on a seven-step process of valuing my business.
- Selling your medical practice
- Selling your manufacturing business
- Selling wholesale distribution business
- Best calculations: How to value a wholesale distribution business
- Selling a professional services company or firm
- Selling a construction company
- Selling a trucking company
- EBITDA multiples for a trucking company | best calculations
- How to value a logistics company | Find a company worth
- Selling an IT Services Company
- Sell my managed security service provider business for the maximum price
- Sell my managed cloud service provider business | Maximize its value
- MSP valuation multiples | What is my business worth
Final Take: Are Business Brokers Worth It
While we’ve presented plenty of helpful tips on how to sell your small business in California, contacting a business broker near you or preparing a business exit strategy can be the difference between selling your small business and almost selling it.
Only 25% of privately held small businesses sell, but you can increase your odds by getting a professional business broker to assist you.
Mainstreet businesses refer to smaller companies considering the sale or exit of their business. Examples of Main Street business exit planning include:
- The Seller is looking to retire or move into another venture.
- Several buyers may bid against each other, elevating your business’s value.
- You’re more likely to negotiate a higher price when you sell to a competitor as opposed to an outside party.
Using a Mainstreet business broker can help give you a competitive edge in the market and eliminate or reduce friction points or roadblocks in the selling process.
Is your business worth $3 million and above? See how to exit/sell a business in the lower middle market category.
Let’s get in touch if you’re considering an exit strategy for your small business. We’ll kick-start a business valuation to walk you through the process.
If you are considering valuing and selling your business or medical practice within six to twelve months, contact Andrew Rogerson, a certified business broker based in Sacramento, California. You can reach him toll-free at (844) 414-9700 or email him at support@rogersonbusinessservices.com. He services the whole state of California.
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