It might be counterintuitive to first-time business sellers, but if that is you and you are exploring an exit strategy, it is important to know that it does
cost to sell your business? How much you would like to spend, however, is entirely up to you, depending on how you wish to market, how involved in the sales process you wish to be, and how much professional support you think you will require.
Below, we’ve explored a few options to help you understand what kinds of costs may be associated with the sale of your company, and how much it may affect your budget, and influence buyers’ decisions.
Old-school or digital?
For those at the help of large companies, it is advisable to enlist the services of a broker or agent to handle the sales process. After all, a seasoned professional with many years of experience and a large network of contacts can assist a seller in their hunt for a suitable buyer, on par with their level of experience and success in the industry. Moreover, a specialist team may be required if the business has a number of locations, operations, or services to offer.
However, if you are the owner of a smaller business, taking to online platforms to advertise the sale of your business may prove to be more cost and time-effective. Bear in mind that although an agent will do the legwork for you when it comes to finding buyers and negotiating prices, he or she will also come at a pretty price.
Agents and brokers
As with most things in the world, what you pay is what you get with brokers and agents as well. Although payment structures will vary from practice to practice, a good agent is likely to cost you more, for it is their experience, knowledge about the industry, contacts, and their negotiating qualities that you will be footing the bill for. It is best to get a recommendation from other trusted business contacts you may have. Also ensure that the agent will give you a complete service, and not simply an advert or a few connections and then leave all the arrangements to you.
As previously mentioned, fee structures vary from brokerage to brokerage. Some will only take a commission (roughly 8-10 per cent) of the on the end-sale price, whilst others may ask for an upfront fee and a smaller commission to cover the cost of research and marketing. On large deals, some agents may even ask for a monthly retainer on top of the closing commission.
However, beware of rogue agents who flaunt unrealistically high business valuations and charge hefty penalties for early termination of contracts, and those who generally try to make a getaway with your money. It’s best to practise caution when a deal appears to be too good to be true.
Smaller businesses will benefit most from online platforms largely as a result of low costs in comparison to hiring an agent to negotiate the sale. Not only this, using an online platform, like BizSale, allows you to keep the sales process personal and immediate, without any information lost in translation with a broker in the middle, and will often result in a quicker sale.
Websites like BizSale allow you to select from a range of plans to meet your needs - from monthly subscriptions, to annual ones, and everything in between. Depending on how the sales process is going, online platforms like this can give you the flexibility to alter your plans to suit your needs at any given point. Moreover, the way in which you choose to advertise your sale can also be altered as when required; from changing the assets available to purchase, what details you wish to disclose about the business, the asking price depending on interest gauged over time, online listings can help you mould the business into exactly what it is you would like to sell and achieve from a sale.
An agent or a broker will not be the only professional you may have to enlist in order to facilitate the sale of your business. Legal, accounting and financial experts will need to be consulted in order to accurately value your business, and also draw up the paperwork once negotiations kick-off. Not only this, but your company’s sale may also be liable for tax, and this is something that your tax consultants will be able to advise you on.
Having the right professional expertise backing your sale will boost the attractiveness of your business overall, ensuring that the sale is a success regardless of which route you choose to pursue - online or agent!