Hire a Business Broker, not a Realtor, to buy or sell a business

Having just concluded a transaction where the buyer selected a residential real estate agent to help them buy a business I had listed for sale, I thought it timely for a reminder for would be business buyers and sellers. Selling a business is not like selling residential or commercial property.  Each requires a very, very different approach.  

Simple advice:

• Hire a business broker to buy or sell a business.  
• Hire a real estate agent to buy or sell residential or commercial property.

Differences in approach to selling businesses versus residential or commercial property include:

• Pricing a business.  Pricing a business is more complicated than pricing real estate.  Pricing a business involves understanding financial statements and how to recast earnings.  It requires knowledge of assets and goodwill as well as access to industry standards and sales multiples.  Property uses sold comps and guidelines for adjusting price based on features.
• Confidentiality.  Business sales are generally confidential.  You need to advertise the business without disclosing it's identity to prevent staff, competition, suppliers and customers from using knowledge of the sale to harm the business.  You need to vet buyers to make sure their intent is to purchase the business and not harm it.  Property sales do not require confidentiality.  In fact, the more people who know, the better.  The more signs, photos, etc., the better chance of selling.
• Working with Buyers.  Successful business brokers keep a Contact Management System (CMS) of buyers looking specifically to buy businesses.  Business brokers work with sellers to determine the right types of buyers to target, corporate vs. individual, strategic vs. job-buyers, etc..  Guiding the buyer and seller through each stage of the sales cycle, i.e., maintaining confidentiality, negotiating offers, due diligence, etc., is often a delicate balancing act to keep both parties headed to the closing table.  Property sales requires far less financial acumen and psychology to complete a deal. 
• Financing. Financing the purchase of a business can be very difficult.  Most business purchases are seller-financed where the seller takes back a portion of the purchase price, and the buyer pays him/her off over time.  The business broker often negotiates the deal structure between buyer and seller and solutions can be very creative at times.  Property sales benefit from the fact they are asset sales (no goodwill).  Banks line up to finance real estate sales.

For additional information regarding Florida business sales, acquisitions and valuations, please contact Eric J. Gall at info@buysellflbiz.com or 239.738.6227. Also, visit our Florida Business Exchange website at www.fbxbrokers.com and my personal website at www.buysellflbiz.com.