Business brokers help entrepreneurs buy and sell small to mid-size businesses. Approximately 800,000 new businesses are started each year in the US, but 50% fail within the first year and 85% fail within 5 years. Only 120,000 to 150,000 businesses are sold each year. Business brokers find buyers and sellers, provide advice, and facilitate negotiations and closing processes. Their services include assessing a business's marketability, structuring deals to minimize taxes, creating marketing materials, and helping buyers find suitable investment opportunities. Using business brokers provides experience and expertise that can help smooth the buying and selling process.

1. How Business Brokers Can
Help Entrepreneurs Buy and
Sell Businesses

2. SMALL TO MIDSIZE
BUSINESSES
• 8 million small to midsize businesses in
the U.S.
• Approximately 800,000 new businesses
are started up each year
• 50% fail the first year & 85% fail within 5
years
• 2% net annual growth
• Only 120,000 to 150,000 businesses are
sold each year

3. Who Are the Buyers
• Family member of the business owner
• An employee of the business
• Individuals that include corporate
executives, blue collar workers, and
foreigners who have moved to the U.S.
• Private equity groups
• Competitors
• Public companies

4. Where Do Sellers &
Buyers Find Each Other?
• Personal contacts – Limited number of prospects
• FSBO Ads – Total lack of confidentiality
• Business Brokers

5. Definition of a
Business Broker
• A Business Broker is an intermediary dedicated
to serving clients and customers who desire to
sell or acquire businesses.
• Typically, a Business Broker:
– Finds Sellers and Buyers
– Provides information and business advice
– Maintains communications between the parties
– Coordinates the negotiations
– Facilitates the closing processes

6. Advisory Services for
Selling a Business
• Determining if a business is marketable and
ready to sell, and if so, help business owners
develop an overall strategy for selling.
• Advise how deal structuring can minimize
legal and tax consequences.

7. Advisory Services for
Selling a Business
• Proper presentation greatly enhances the
marketability of a business. The
presentation typically includes:
– a summary of the company’s history &
background
– normalized financials
– explanation of current operations, and future
opportunities
– maps, pictures, and list of assets

8. Advisory Services for
Selling a Business
• Implement a marketing program designed
to maximize the number of buyer prospects
through utilization of:
– the broker’s database of buyer prospects
– referral network of other professionals such as
attorneys, accountants, bankers, & suppliers
– international & national “Business for Sale”
websites
– and the broker’s website

9. Advisory Services for
Selling a Business
• Buyers often have accountants,
attorneys, and other people advising
them on how to buy a business. The
Business Broker will have the
experience and expertise to insure that
you have strong representation on your
side throughout the process.

10. Advisory Services for
Buying a Business
• Helping entrepreneurs find business
investments is a major part of a Business
Broker’s services.
– Some people come to a business broker not
knowing what they want. They just know they
no longer want to work for someone else.
– Some people want a specific type business.
– Buyers can be individuals, investment groups,
private equity groups, or existing companies
who desire to grow through acquisition.

11. Advisory Services for
Buying a Business
• Find businesses that meet the buyer’s
criteria and investment requirements,
such as:
– Available equity funds
– Type of business
– Size of business
– Location limitations
– Required profitability

12. Initial Meeting With The Seller
• Ask questions regarding business
operations, it is not due diligence time
• Ask about business history and background
• Ask about growth opportunities
• Obtain clarifications regarding financial
data
• Tour the business facilities
• Make your own personal assessment about
the business

13. Where to find Business
Owners Who Want to Sell
• Trade associations
• Referrals from accounts & attorneys
• National websites
• Direct mail and personal contacts
• Business Brokers

14. Why Would Someone Sell A
Profitable Business?
• Tired of government hassles regarding regulations
and taxation
• Tired of employee training and turnover
• Has found another attractive investment
• Health problems
• Divorce
• Partnership problems
• Retirement
• Burn Out

15. Need For Confidentiality
• The owner or Business Broker will require
that you sign a Confidentiality Agreement
prior to your obtaining any significant
information about the business
• Perception relating to buying real estate vs.
buying a business
• Concern regarding premature disclosure to
employees, customers, suppliers, banker,
landlord, and others

16. Meeting the Seller
for the First Time
• Have a personality, sell yourself
• Dress appropriately
• Be friendly, polite and professional
• Explain your background & history but don’t
boast
• Make the Seller believe you’re interested in
his/her business and not interest in
competing

17. Qualifying The Seller
• When you meet the Seller, does he/she seem
honest and straight forward?
• Why is the business for sale?
• Is the asking price realistic?
• Are financials provided?
What to do if not
• Are debts, liens, leases, etc. disclosed?

18. Financing Options
• Does the business meet SBA financing
guidelines?
• Is owner financing available?
Shows confidence in the business
– Are the terms realistic?
– The Seller will require a 1st lien on the assets
and a personal guarantee on the note

19. Typical Confidentiality
Agreement Terms
• Agree not to tell others that the business is
for sale, except for professional advisors
• Agree not to utilize confidential information
to go into competition with the owner
• Agree not to talk to employees, customers,
suppliers, & landlords until authorized by
the seller
• If a Business Broker is involved, all requests
for confidential information must be made
through the business broker

20. Managing The Buying
Process With The Seller
• Don’t insult the seller with a low offer.
• The earnest money contract should be bilateral
not unilateral.
• Be willing to compromise.
• Negotiate, don’t dictate.
• Split the cost of closing.
• Remember, in most cases, the Seller is your banker,
mentor, trainer and goodwill ambassador.

21. More Tips On
Making An Offer
• Time is the death of all deals.
• Due diligence period is typically 2 weeks to
30 days.
• Seller training – 2 weeks to 30 days as part
of the sale price.
• Seller consulting by phone – 60 days to 6
months after closing at no charge.
• If Seller stays on to work – require a
reasonable salary.

22. How To Use The Seller
After The Sale
• Friendly training and Transition
You want the Seller to go above and beyond the call of
duty.
• Provide additional incentives to the Seller to
help grow your business
 Commissions on sales
 Referral fees
 Member of your Board of Directors
 Transition parties with employees, customers, vendors, etc.

23. Other Services Provided by
Business Brokers
• Through our affiliations with other
professionals, a Business Broker can
recommend highly qualified people to help
you in the sale of your business or the
acquisition of a business. These resources
include:

24. Referral Resources
• Financing Resources:
– SBA loans, private equity funds, equipment
leasing, self-directed retirement plans and seller
financing.
• Accounting professionals:
– can help you during due diligence and help you
understand the tax consequences of buying and
selling a business.
• Legal Resources:
– can help you form the right business entity and
create & review legal documents.

25. Choose a Business Broker for the same
reason you choose an attorney and CPA:
…… EXPERIENCE AND EXPERTISE

26. Where to Find a Qualified Business Broker:
International Business Brokers Association
7100 East Pleasant Valley Road
Suite 160
Independence, Ohio
44113
888-686-4222
www.ibba.org