There are many ways to buy a business these days, including directly approaching a business owner, or buying directly from the owner after seeing an advertisement online. There are several reasons why buying directly from a vendor isn’t a great idea, and why buying through a broker will save you time, money and stress.
A good business broker has helped people buy and sell businesses time and again. Over the years, they will have seen all the patterns, trends and tricks. They are in a really good position to guide you as to:
- what features to add to your “Offer to Purchase” document, that will help protect your interests (or what to ask your solicitor, if you have one)
- what price range might apply to the business
- common features of a business transition (such as a trial period, assistance period, banking finance, lease transfer, franchise agreements etc) and
- how to negotiate with interested parties (this includes “sealing the deal” with the vendor, but also negotiating with landlords and franchisors).
Using a broker will open your mind. If you are thinking about buying a business direct from an owner, you will become fixated on that one opportunity, to the exclusion of all others. A broker has many businesses for sale. This will allow you to compare various aspects of businesses that are for sale (location, price, length of lease etc). Remember, there’s a lot to learn when you buy a business, and a business broker will not only guide you, and good one will help educate you along the way! When you buy directly from the owner, there’s a bit more hassle and stress. The owners have a lengthy history with their business, and they might be going through some personal pain saying goodbye to it. Sometimes people sell businesses after a difficult period in their life (an illness, a divorce or bereavement), so selling their business become especially stressful for them. When you buy through a broker you are protected from having to deal with vendors in this position. The emotion is taken out of it.
Other things to remember are that if you buy directly from a business owner, they are not bound by the same rules that will protect you if you purchase from a business broker, who is part of an industry regulated by the government. Our longevity relies on our reputation, and our reputation relies on our trustworthiness.
Protect your interests: buy through a broker, every time.