South Jersey Business Brokers: Article About Business Broker Process
Many sellers have questions about what happens when they hire a business broker. What does the business broker do? How does the process work? How fast will my business sell?
So what should you expect when you hire a broker? Typically, the following process occurs after you contact one of our South Jersey business brokers.
Telephone Assessment: the first step is to have a phone conversation with your broker so that you can explain your goals and pose any questions as well as introduce your company in general terms.
Meet the Business Broker: If an initial telephone assessment indicates that you and your business broker may be able to effectively work together, then you and your broker will have a face to face meeting, often at your location. The purpose is to discuss your goals and to provide the broker with a better understanding of your business.
Set the Price: after your broker has reviewed your business financials, contracts, customer base, business operations and any intangibles, your broker will advise on a price range. The price is determined by the value of your business and the marketplace for a business in your industry.
Create the Listing Agreement: the listing agreement is the contract between the broker and the business seller. It includes fees and work to be performed by the broker.
Create the Seller Memorandum: your business broker will provide you with a list of documents required to create the Seller Memorandum. The broker will draft the Seller Memorandum and provide it to you for approval before presenting it to interested buyers. Most Seller Memorandums are provided to only qualified Buyers via email.
The business brokers from Selby Associates of South Jersey would be happy to answer any question you have about business mergers or business exit planning.
Seller Memorandums tend to be very detailed packages and can be anywhere from 20 pages to 100 pages depending on your company. Seller Memorandums are not to be confused with a Business Summary which is generally only a few pages.
Find a Qualified Buyer: your business broker will find a qualified buyer through the broker's network of contacts and through advertisements.
Executed Non-Disclosure Agreement: your broker will require that every interested buyer sign a non-disclosure agreement to protect the confidentiality of your business.
Negotiate with Buyer: your business broker will address the buyer's concerns and represent you in negotiations with the buyer.
Letter of Intent: your broker will work with the buyer's representative or attorney to negotiate a Letter of Intent that includes all of the details about the sale and formalizes the agreement. This Letter of Intent will provide dates for completing due diligence, drafting contracts, closing, etc so that both parties can have a schedule for completing all tasks necessary to get to closing.
Due Diligence: the buyer and the buyer's broker conduct due diligence and request the necessary documentation to fulfill their review. This could include being at the company during business hours.
Closing: Closing includes executing final documents which may include an asset purchase agreement, non-compete agreement, consulting agreement, a lease if you are renting property to new owner, or a note if you are providing seller financing. Your business broker will work with you and your attorney to formalize the details at the best terms prior to closing.