Are you planning for an exit wherein you get to take home all the money for the years of effort you’ve put into your business? Selling a business without a broker will always be a lucrative option. This is especially true if you’re a small business owner who feels that brokers take out hefty fees as you go through the sale process.
In this “How to Sell My Business Without a Broker” guide, we cover these three main points.
If you’re going down the sell-without-a-broker route, the first team you need to hire are people who know how to appraise companies like yours. You need a business valuation prepared by the pros because of their unbiased methodologies that bring realistic results. While every owner can equip themselves with knowledge about valuation, their personal feelings can cloud their judgment, resulting in a price that might be higher than its true market value.
Financial preparation is also included in pre-sale preparations. Tax implications will be imposed after the sale. Furthermore, you will no longer be earning the same amount of money on a regular basis. You need to secure your life after the sale and ensure that your finances are in order.
Your monthly earnings may attract potential buyers, but you need to support the figures through the documents required during the due diligence process.
Since you’re on your own in your pursuit of buyers, it’s time to list down the names of those who are likely to invest in a business like yours. But how do you attract these people when you’re ready to offer the company for sale?
Creating a compelling sales pitch is the first step in marketing a business for sale. You’ve already gone through this process when selling your products or services. This time, the focus is on highlighting an element of your business that will catch the eye of someone looking to grow through your operations.
After you’ve polished your pitch, it’s time to advertise it through different marketing channels. You can explore LinkedIn for starters. You can also try business listing marketplaces such as Empire Flippers, BizBuySell, Flippa, and BizQuest.
Part of how to sell a business without a broker is finding potential buyers for your business, which starts by casting a wide but targeted net. Online marketplaces, industry networks, and personal connections can help you identify interested parties. However, the real work begins with screening potential buyers to see whether they have the financial capacity and serious intent to make an offer. Requesting proof of funds or a personal financial statement early in the process can save time and effort.
Once an interested buyer seems promising, assessing buyer intentions should be the next step. Remember that identity theft and stealing trade secrets are rampant. Are they genuinely interested in operating the business, or could they be seeking insider information and selling it to competitors for their own benefit? Enforce a non-disclosure agreement (NDA) before sharing sensitive details. Never provide specific customer information or proprietary processes until you’re deep into negotiations.
If managing this process feels overwhelming, you might ask yourself, “Should I use a broker to sell my business?” Brokers can streamline the search and vetting process, freeing up your time to maintain your business operations. They also bring expertise in negotiations and can help secure the best deal.
You’ve decided to sell your business without a broker, which means preparing for negotiations and handling all terms on your own. The next biggest question once you choose to sell is: “How do I try to tip the deal in my favor?”
Any advice on how to sell a small business without a broker will stress that one of the best negotiation techniques is helping the buyer clearly understand what it takes to run the business, including both its advantages and disadvantages. The more you are open to answering questions, the more likely you are to finalize the deal with a buyer.
Take your time—allow buyers to carefully consider your offer while also setting realistic timelines. Effective negotiation ensures you get a fair price and helps preserve a positive relationship with the buyer. Remember, you also need to maintain a legacy and a good reputation even after you’ve made your exit from the company.
After agreeing on a price, you’ll be entering the final steps of the selling process. Work with the buyer to write the sales agreement, detailing the following:
You’ll work with your buyer to draft a sales agreement that specifies important details like the payment schedule, the assets included in the sale, and any conditions that need to be met. To protect yourself, it’s a good idea to have a lawyer review the agreement to catch any potential legal issues. Bringing in an accountant can also help you fully understand your tax responsibilities after the sale.
Throughout this phase, both parties’ lawyers will negotiate terms to ensure everything is in order, including non-compete and employment agreements. Your lawyer will guide you through any complex legal matters while you stay in touch with the buyer to keep everything on track. Once everything is agreed upon, the transaction is typically managed through escrow, ensuring both you and the buyer are protected. Taking these final steps with care helps ensure a smooth and successful sale.
How do I sell my business without a broker?
In summary, these are what you need to do when selling a business without a broker’s help:
What can I expect from the post-sale transition?
The post-transition period is all about helping the new owner settle into their role and ensuring the business continues to run smoothly. This includes handing over detailed documentation, offering training on processes, and being available to answer questions as they arise. Beyond transferring physical assets, it’s also important to share insights about customer relationships, supplier connections, and any unique operational nuances.
Why does the sale process need to be confidential?
Revealing the sale of your business to unrelated parties can impact its value. For instance, if employees learn about the sale, concerns about job security or management changes may lower their confidence in the company. This uncertainty could lead to resignations, disrupt operations, and potentially affect the overall sale price.
Which documents do I need to prepare for the due diligence phase?
For the due diligence phase, you’ll need to prepare key documents such as financial statements, legal agreements, insurance policies, and any other records the buyer might request to evaluate your business. If the buyer is a company or private equity group, it’s also helpful to inquire about their funding sources and past acquisitions to ensure they align with your goals.
Recap of key strategies:
If you have a change of heart and have decided to forego your plans to sell business without broker, talk to our experts at WebsiteClosers.com.