Should I enlist a business transfer agent to sell my business?
Embarking on the path to selling your business can be daunting if it’s your first time and you’re juggling the decision to use a business transfer agent or conduct the sale privately.
You may have nurtured your existing business or established a brick and mortar business, committing to it both financially and emotionally, giving weight to the decision you make next. By taking an informed approach, you can pave the future for your business and generate returns from your investment.
The process of selling your business can be packed with time-consuming tasks and unexpected hurdles if you are not familiar with the procedure or fail to seek out the correct guidance. In addition to sourcing a buyer for your business, there are several stages which accompany this process, such as preparing your business for sale, collating the relevant documents and conducting a business valuation. We run you through the advantages and disadvantages of using a business transfer agent to sell your business or directing a private sale.
Advantages of using a business transfer agent
- Previous track record: By selecting a business transfer agent with years of experience in the field of business transfer, you can speed up the process. Using an agent can open the door to learning about best practices and accessing industry knowledge to increase your chances of securing a serious buyer and achieving high returns.
- Industry knowledge: An experienced business transfer agent will be able to pinpoint areas of concern and the mitigating factors which will directly impact the value of your business. Due diligence will also be carried out by the agent, opening the doorway to buyers with the necessary track record to fulfil the sale. When reaching the stage of negotiations, your account manager will be able to gauge the buyers’ appetite, helping you arrive at a suitable offer.
- Dedicated account manager: As with the services of a business transfer agent, you will typically be allocated an account manager who will guide you through each step of the process and provide you with regular updates. If you have additional commitments, in addition to directing the sale of your existing business, appointing external support can help reduce the level of responsibility on your shoulders.
- Industry connections: Reputable business transfer agents typically have extensive databases of buyers actively searching for suitable business acquisitions. Business transfer agents can typically pair you with a selection of serious industry buyers in the market looking to imminently invest in their next business venture. This supercharges the process which would otherwise require multiple resources amounting to more time and money if embarked on independently.
- Full-service provider: Business transfer agents provide a full service, typically including a business valuation as part of the overall cost which is serviced either in-house or outsourced. By ticking off each point on the business preparation checklist through your business transfer agent, you can minimise costs and keep your affairs in one place.
Disadvantages of using a business transfer agent
- Limited control: If you are in favour of taking a more hands-on approach and having a greater level of control of your business affairs, outsourcing to a business transfer agent may limit your responsibilities and ability to fully manage timeframes.
- Associated fees: If you are skilled in the process and can attract readily available, prospective buyers, the associated fees may not be worth your while if you’re able to successfully and skilfully conduct the sale independently. If you’re interested in keeping overheads low as the necessary resources are already available to you, you may decide towards using a commercial agent to sell your business.
Note: Reputable agents operate on a no-win, no-fee basis and refrain from asking for payment in advance.
Things to consider when selling your business privately
- Unlimited control: If you would like to maintain a greater level of control and handpick who your business will be marketed to, selling your business privately, without a broker or a business transfer agent may be the route for you. By selling your business privately, you can control the type of prospective buyer you market to.
- Overheads management: By selling privately, you won’t need to factor in commission on the sale and you can control further costs that you incur. If you have no marketing direction, this process may take longer than approaching sellers through word of mouth marketing and targeting a verifiable database of prospective buyers through an agent.
- Lack of experience: When selling alone and without the assistance of a commercial agent, you won’t have reassurance from a credible party and be able to take advantage of the instincts of a business transfer agent, born out of years of industry experience.
You will need to carry out extensive due diligence which may require access to paid software, as by undermining prospective buyers and targeting ingenuine buyer, the sale of your business could be jeopardised.
- Protecting sale confidentiality: There are measures in place which enable business transfer agents to advertise business opportunities without compromising the identity of the business. By taking this route privately, you are at higher risk of disclosing the business which could jeopardise relations with existing staff.
The route you take will be determined by your personal preference and previous experience in selling businesses. Opting for a business transfer agent is a safe and effective route, popular for both first time and veteran sellers due to fast results, speed of service and the straightforward payment structure. If you are interested in exploring the routes available to sell your business and would like more information on using a business transfer agent, contact a member of the Selling My Business.