Buyer's Guide to Working With a Business Broker
Business broker is a licensed professional who works with buyers to guide them through the process of buying a business
Purchasing a business might seem like a straightforward process with some people thinking it’s as simple as buying a product from the supermarket. But as every business buyer knows, the process can quickly become overwhelming and at times, complex. That’s why most buyers opt for the help of business brokers and their expertise to make the buying process run smoothly.
Business brokers are licensed professionals who can assist in the buying and selling process of a business or franchise. Choosing the best business broker to work with is important and can mean a big difference to your final purchase price.
Whether you’re an ambitious entrepreneur looking to buy a business for the first time or a seasoned investor, partnering with a professional business broker can be a game-changer in your journey toward success.
In this article, we'll provide a buyer's guide to working with a business broker. We’ll take you through the role of a business broker, their responsibilities, how to choose the right business broker and how to effectively work alongside them from start to finish.
The role of a business broker
A business broker is a licensed professional who works with buyers to guide them through the process of buying a business. They play a pivotal role in the business sales process whether they represent the seller or buyer.
Business brokers are tasked with overseeing and managing a range of tasks. Here are the 10 key responsibilities of a business broker:
Business broker responsibilities
Initial Consultation: Meet with potential buyers to understand their needs, goals, experience, and financial capabilities.
Business Identification: Locate businesses for sale that match the buyer's criteria, including industry, size, location, and price range.
Vetting: Scrutinise the business's financial statements, market reputation, and other crucial details to ensure their legitimacy and viability.
Valuation: Appraise the market value of the business using industry standards, accounting for financial performance, assets, growth potential, and market trends to determine its worth.
Negotiation: Facilitate negotiations between buyer and seller, working to secure the most favourable terms for the buyer.
Due Diligence Support: Assist in the due diligence process by providing the necessary questions to the business that is being sold.
Regulatory Compliance: Ensure the transaction adheres to all relevant legal and regulatory requirements.
Closing the Deal: Facilitate the final steps of the transaction, including the transfer of funds and assets.
Post-Sale Support: Offer assistance post-closing, such as transitioning services, introducing the new owner to key contacts, and offering advice on business operations.
Maintaining Confidentiality: Throughout the entire process, a business broker must ensure confidentiality to protect the identities and sensitive information of both the buyer and seller.
Why work with a business broker
A professional and experienced business broker can deliver on those responsibilities above while also offering business insight and advice from their combined years of experience. One of the most valuable aspects of working with a business broker is gaining access to their expertise and industry insights, which significantly streamline the buying process.
Business brokers can identify suitable businesses that align with your interests, financial capacity, and long-term goals — already saving you time and effort. They have a rigorous evaluation process that can help steer you to the right ones to buy and away from businesses that only appear to look good on the surface but may harbour hidden issues.
Negotiation is another critical aspect where business brokers play a huge role and can really benefit you as a business buyer. They act as the intermediary — maintaining a level of emotional distance — and use their negotiation skills and market knowledge to ensure you get the most favourable result.
The best thing about working with a business broker — and often the most overlooked — is them maintaining confidentiality throughout the process. Privacy is crucial in business transactions to protect both buyers and sellers. Brokers have systems in place to protect sensitive information, ensuring it is only disclosed to relevant parties at the right time.
Navigating the buying process with a business broker
The process of buying a business with a business broker can be seen in these steps.
Choose a business broker
Do thorough research to find a reputable business broker who specialises in the type of business you're interested in. Look for business brokers with a proven track record and positive client testimonials.
Know your business objective
Before you begin searching for a business to buy, identify your business goal, budget, financial capacity, chosen industry, and location. This information will help your business broker find the right business for sale to present to you.
Consult with your business broker
Share your business goals and objectives with your broker. Be open about your financial situation, your business experience, and your expectations for the buying process.
Review potential business opportunities
Your business broker will take in your criteria and find the right business for sale to match it. They will take the time to vet the business and verify the accuracy of financial statements and other information. They will then present you with potential businesses along with a valuation of each potential business for your consideration which you can carefully review.
Making an offer
Once you have a business you want to purchase in mind and a clear picture of its potential, you can proceed to make an offer. Your business broker can guide you through the market norms and assist in drafting an offer that balances your interests and the seller's expectations. An experienced broker will also be familiar with the art of negotiation, helping you navigate this often complex and sensitive process.
Closing the deal
After completing the due diligence process, a business broker can help you put together your final purchase offer, work through the negotiation process with you, and close out a successful deal. All of their expertise benefits you as a buyer and can even assist you in reading through existing contracts or agreements and determining your next steps.
Business brokers do more than just matching buyers with the right businesses, they are there to guide you through the complex process and take the time to understand your needs, conduct due diligence, make an offer, and finally close the deal.
Kakapo Business stands out as the most trusted and exemplary business brokers in NZ. What sets us apart is our high touch point approach to every customer’s journey. To us, every customer is valued, and each transaction is treated with dedication and professionalism. Choose to work with us by contacting our team of business brokers and let us help you find the business for sale that’s right for you.