If you are a business owner, it is important that you understand the differences between a business broker and a real estate agent. From listing to close, the process of selling real estate and businesses is completely different. This is why it’s important to get the right advice when selling your business.
Business owners often think to use a real estate agent when selling their business. Even if your business owns real estate, it does not mean you should use a real estate agent to sell it. A real estate agent is anyone that holds a real estate license. They have experience selling real estate, but typically do not have experience selling businesses. Many business brokers also hold real estate licenses, since businesses can own real estate, and this real estate is often involved in the sale of the business.
Real estate agents help you list and sell real estate properties. Their primary goal is to put your listing in front of as many people as they can. Most real estate advertising tales place online or in mass publications. When selling real estate, your agent will want to find as many interested buyers as possible.
When selling a business, confidentiality is often an important part of the process. Business owners often do not want to advertise that their business is for sale because it can lead to employees leaving the business or customers deciding to switch to your competitors.
This is where a business broker can help;
Business brokers are skilled at marketing a business in a confidential fashion; the goal is not to maximize exposure but to minimize risk by showing your business only to pre-qualified buyers. A broker will prepare a document called a confidential information memorandum, or CIM, which is a document used in mergers and acquisitions to convey important information about a business that’s for sale. This document usually includes information about the business’ operations, financial statements, management team, and other data that will be important to an interested buyer. Buyers must sign a non-disclosure agreement, or NDA, in order to receive the CIM.
Another reason why you should use a business broker when selling your business is that they will help you price your business. Pricing a business for sale uses different principles compared to pricing real estate. Your business has many dynamics that influence its performance and valuing your business fairly, for both you and your buyer, is extremely complex. When selling a business, a business owner must also be able to justify the price they have listed the business for. A business broker is experienced in pricing businesses and can help you determine the optimal listing price to sell your business.
The closing process when selling a business is also different from your average real estate transaction. In particular, the due diligence, financing, and purchase and sale agreement are all done differently. Businesses are much more complex than real estate, and a business broker will help you navigate these complexities throughout the sale process from start to finish.
If you are considering selling your business, make sure you get the right advice. Having proper advice will help you find the right buyer, get the best price, and smoothly navigate the sale process.
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