If you’re selling your business for under £1 million, there’s a reason to avoid the high volume business transfer brokers!

Selling a business is similar to most things in life. If you’ve got the money, chances are you’ll get a better service and a better outcome. When it comes to selling a company below £1 million it’s often unlikely that a business owner will recruit a professional team to help with the sale. The process is long and the fees are high.Furthermore, the business owner wants to walk away with as much profit as possible!

That being stated, what kind of service does a business owner selling for under £1 million get? From what we’ve discovered it’s not very good at all – and worse, it can be very costly too. Not being an expert in this area, I contacted Andrew Weaver, the founder of SellMyBusinessOnline.co.uk to give us an insight on the market and what he’s doing to change the poor service levels and high costs that are currently on offer.

Joanna: Is it possible to get a high value service at a low cost?

Andrew: I have been involved in corporate deals for 10 years. Selling a business is rarely easy nor quick. The process is demanding of both seller and advisor with the result being that good quality advisors gravitate towards the size of deal and client that can justify their time and fees. As a very general rule, this tends to be businesses with turnover >£1m.

The vast majority of businesses fall beneath this radar and have traditionally instructed volume transfer agents who, because selling a small business can be challenging and time consuming, provide a service that is as much about protecting their time, as driving best value for the client. It’s a model based on committing sellers to exclusive contracts, high up front fees and/or large commissions at sale. Often, for little more than a matchmaking service. I founded Sell My Business Online to help those businesses with <£1m revenues and provide a better service.

Joanna: How have you successfully provided a high value service at a low cost?

Andrew: Here at Sell My Business Online what we’ve done is create a bottom up service by streamlining the process focusing on the high value unique elements of the process. We’ve removed the need for an exclusive broker contract, invited clients to build up the level of cost and expertise as relevant to their own particular sale process and provided a low cost access to the market via our marketing channels.

Joanna: Can business owners sell without a business transfer broker?

Andrew: Yes! Sell My Business Online is a marketing and sales ‘support’ service. We enable businesses to get to the market efficiently and cost effectively. There is no agents contract to sign and no agents commission to pay. Clients can purchase additional advisory services by the hour, if required. We can also step into a mandate at anytime, if the vendor feels out of their depth.

We don’t advocate a DIY service for all businesses. Many business require a much more detailed and sophisticated marketing approach but Sell My Business Online is ideal for the smaller business and straight forward deals.

Joanna: What advisory services do you offer and how much are they?

Andrew: Sell My Business Online is supported by MBA qualified team of corporate deal brokers: Daresbury Company Solutions.

We offer a marketing service at £95 and a £495 advisory service. Most clients start with our advisory service and build up the expertise as required, including using our more traditional advisory services which include buyer research, deal facilitation and mentoring.

Joanna: What are the top 3 tips for business owners looking to sell within the next year?

Andrew: 1) Good preparation makes all the difference. Try and sell close too or just after year end – all your numbers are fresh.

2) Don’t fix price expectations on pre-sale valuation or (worse) on what you need. Prepare well, have a good marketing campaign and the value will follow.

3) Be sympathetic to a buyers’ anxieties. You know your business inside out, the buyer doesn’t and buying a small business can be fraught with risk. The best deals come from parties who are open, communicative and understanding with each other.

So there you have it. It is possible to avoid poor service from high volume business transfer brokers and there are providers who specialise in the <£1m market with a more tailored and open approach allowing business owners to research the market first without having to commit to a broker and their fees. If you would like to know more about Andrew and his company visit SellMyBusinessOnline.co.uk

Joanna Miller helps business owners navigate their way through the start to finish process of selling a business. Her specialty is helping owners understand how to prepare and make the most of their business sale process to maximise their company’s value. To understand how you can sell your business quickly for the highest sales price, purchase her book, “How To Sell A Business: The #1 guide to maximising your company value and achieving a quick business sale”

The best broker to sell your business

A lot of work goes into making a business successful. But nothing lasts forever, even if your business is something you love and watched grow from a tiny baby start up into a fully grown adult money making machine. There comes a time when you want to sell that business.

It may be that you want to work in another sector or want to retire. Whatever the reason you need to ensure the process runs as smoothly as possible and the most effective way of making sure this happens is by finding the right broker company.

Consider your Exit Strategy

A lot of people who run seminars or give talks on running a business will talk about having an “exit strategy.” This is when people decide when they want to leave a company and how they intend to do it. However people are only human and the odds are when you work every day on your business you may not have thought of the practical steps needed when you need to sell up with a vague “some time in the future” in your head.

The temptation then is that when you finally do decide enough is enough you may decide to go it alone. After all you’ve set it up and made money for yourself why can’t you sell it yourself?

The reason this approach is not as effective is quite simply the law of averages! If you try and sell a company on your own then it is likely you will only be able to deal with one potential buyer at a time. The danger of this is that if a deal falls through it can mean going back to square one all over again each time, adding further stress and work that you don’t need when someone else can handle it for you!

A broker can deal with a number of clients at once because…well it’s their job. Even if you are robot level efficient there’s only so many meetings you can go to. Depending on who you go with they can also assist on the marketing and finance side as well, all things that could potentially screw up a sale.

Hold A Talent Contest or Beauty Parade

All of these aspects need to be considered when comparing the various types of company broker available to you. In some respects it is like a talent contest and you are the judge- therefore it is up to you to ask the right questions!

The most important question of all is- can you give us references? They ought to be willing to give proof of any claim and be able to supply you with convincing evidence that they can do what they claim to do. Trust your instincts- if the reference seems dodgy, look elsewhere!

Another aspect is the valuation- if they offer a figure that is too high or low then it is best to avoid them. In both cases there is a danger that they have an ulterior motive so it is best to do a little detective work to see the facts behind the figures.

Also get them competing! Don’t be afraid to get ruthless – get a couple of quotes and then call them back saying what the other one offered.

(Note: In the Sell Your Business Store, we offer a beauty parade pack to help you ask the right questions to obtain the best broker, solicitor and financial people!)

The Small Print

ALWAYS READ THE SMALL PRINT!

The odds are they will have various fees that they charge for their work. Do not take what they say at face value.

Part of the problem is finding people you know are reliable, rather than hoping that the people you are contacting are real. Anyone can create an official looking website and anyone can dress up their service with fancy sounding jargon.

Business networking groups are ideal places to go for this- someone usually knows someone else and if they genuinely like the service they offer then they will tell you!

Stay in touch

Even the surest of deals can go down due to unnecessary delays. One of the most frustrating things is to find your perfect deal went wrong because someone didn’t check their email or didn’t respond quickly enough to a phone call.

If the broker is in your local area, pop into their office unannounced before you do the deal. See how they handle the day to day running of a business. Look at the way they arrange their desks, the way they talk with each other. If your business sense starts tingling the odds are something is amiss- in some respects it’s like courting and it is up to you to read the signals to see whether your potential broker is the perfect date or the perfect dud!

Checklist for choosing a broker

In short there are a few things to check over before you choose a broker-

Know your exit strategy
Set a time frame
Do your research
Is their approach appropriate for your business?
Can they offer assistance with marketing and financing?
Ask for testimonials
Ask about fees upfront
Is their valuation realistic?
Compare at least three different company brokers.
Ask around at local business networking groups.
Make sure they stay in touch with you and keep in contact during the selling process.

Another thing to remember is that there are no guarantees and no broker can promise you definite sales. But like any investment in your business doing your homework and comparing all your options will give you the best possible chance. While it may be hard waving goodbye to your grown up company you can do so knowing it’ll find a good home!

Tag: brokers

How and why you should avoid poor service, high volume business transfer brokers