4 Tips For Working With Business Brokers

It's important that you cast a wide net when working with a network of business brokers. This allows you to check out more business in a wider range of industries. As a business buyer you may want to look geographically as well as in a finite range of businesses. Most business buyers do not seek representation or assistance when buying a business, consequently the results can be disastrous.

Here are a few things to be aware of when working with a business broker who represents a buyer.

I. The business broker must represent YOU- Frequently in a business transaction the listing broker will show you the "deal of the week," or try to answer questions for you assisting you in the process of buying a business. Traditionally the listing broker represents the seller - not you (the buyer). Be aware that the listing broker giving you advice may have great intentions but the way they get paid is by selling the business.

II. Commissions - One of the most obvious yet confusing practices is that not all business brokers will share their listings and co-broker deals. That means that if you procure a business buyers representative, you may have to compensate this representation out of pocket before or at the time of closing. Please don't let this deter you from getting representation. A good business broker can be well worth their weight in gold. A good buyers representative should assist you in putting in your offers, helping with due diligence, helping you with closing and finally transitioning into the new role. Remember a listing broker maybe compensated anywhere from 5%-15% of the transaction's purchase price! You may want to only look for listings where the buyer's representative will receive part of the commission - consequently saving you money for representation.

III. Research your representative - Business buyer's representatives will wear different hats including attorneys and accountants. Research your representative and make sure they have experience assisting other business buyers. Ask for referrals from the representative of buyers who they have completed successful transactions with. Ask them what type of businesses they've owned. A brand new attorney or CPA may have experience from a local school - however it's important that you hire assistance that will know the intricacies of buying a business in your trade.

IV. Educate yourself - Prior to working with a broker or even seeking for a business to buy educate your self on the process of buying a business. Business acquisitions can be more lucrative than real estate; however you need to have a firm grasp of every step of the acquisition process. You don't need a degree in business management; however you do need some specific knowledge. Inherently no one will represent your interests better than yourself.

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