Virtually everyone knows what a real estate broker does, and most have a working knowledge of what stock brokers do. But what on earth is a business broker? Think of us as matchmakers in the world of mergers and acquisitions. Business brokers bring sellers and buyers of businesses together. Whether we represent the seller or the buyer, we typically represent only one side of the transaction.
Brokering Businesses in Utah
Selling businesses as a profession does not currently require a State of Utah mandated license; some states do require a specific license to broker businesses. However, most businesses are sold with some real estate or with a real estate lease involved, thus requiring a real estate license. At Utah Business Consultants, all individuals selling businesses are licensed by the Utah State Division of Real Estate. As surprising as it may seem, according to the SBA and the U.S. Department of Labor, over 50% of all businesses sold in the United States are sold through a business broker. Running the numbers amounts to several hundred thousand businesses annually sold through business brokers.
Why Use a Business Broker?
If trying to sell a piece of real estate without a real estate broker is painful, selling a business without a qualified business broker is excruciating — like a root canal without anesthesia. Selling your personal residence may be achievable on an FSBO (for sale by owner) basis. After all, you may have a good understanding of what other homes are selling for in the area. However, in order to capture the most buyers, home sellers typically want to employ a real estate professional to maximize exposure through multiple listing services (MLS). The difficulty with selling a business is exponential. Where with real estate you want everyone to know your home is now on the market, business owners don’t want the general public to know they are even thinking of selling – not their clients, not their suppliers, and certainly not their employees. As business brokers, we have the delicate task of finding all the right buyers, without letting employees, and other crucial business contacts become aware of the sale.
Our objective and motto are to maximize the value of our client’s business. For most of our clients, selling their business comprises the largest single transaction of their lives. It makes sense to get professional help and expertise. Most of our clients don’t know what the true market value of their business is. They tend to either overvalue the business, which leads to having it languish in the market too long, or undervalue it, which leads to leaving money on the table. Structuring the terms of a business transaction is also important, as well as helping buyers obtain bank financing in order to minimize seller financing. Given the stakes in the game, it’s essential to have a business professional assisting you through what might amount to the largest financial transaction of your life. Maximizing value and minimizing problems throughout the transaction process, is what business brokers do.
-Bradley G. Marlor MBA, CBI is a Managing Partner at Utah Business Consultants and a Certified Business Intermediary. Utah Business Consultants is a full-service Business Brokerage and Valuation firm.