Business Broker – Who they are and what do they do?

Business Broker - Who they are and what do they do?

Business Brokers act as intermediaries between buyers and sellers of a business. It is a profession under the radar but provides essential connections for companies to an extensive database of local and international buyers. In some aspects, business brokers operate similarly to real estate agents, but their practice is limited to business entities.

Business brokers traditionally represent the sellers, but buyer representation has been more common in recent times.  Some brokers engage in buyer and seller dual agency representation if all parties agree. If the brokers represent neither the buyer nor the seller, they are described as transactional brokers and deal with both parties on equal terms. 


Duties of Business Brokers include:

1.      Price the business with a professional valuation

2.      Draft an offering summary, also known called a confidential business review

        This document becomes one of the essential marketing tools for the offering

         It is provided to prospects only after they have signed a confidentiality agreement and been qualified by the broker

3.      Market the business to the broadest possible audience while maintaining strict
confidentiality, which is a significant distinguishing difference between business brokers and real estate agents. Real estate agents advertise the specific location widely to get buyers or seller, while business brokers are trained to maintain strict

4.      Introduce prospective buyers to the business after executing the insuring of confidentiality agreements

5.      Facilitate meetings between the potential sellers and buyers

6.      Create offers to purchase the business

7.      Handle negotiations between the parties after an offer has been made

8.      Facilitate due diligence investigation as purchase offers are almost always made contingent upon a further due diligence investigation

9.      Assist the buyer in obtaining business acquisition financing

10.  Schedule and simplify the closing of the transaction


Some Tips on Engaging a Business Broker

1.      Maintain confidentiality 

       For most businesses, news of the intended sale must be kept confidential as there could be a significant loss in the business’s value. Often, confidentiality is compromised due to a news leak from staff, customers, or competitors who find out that the owners are considering selling. Therefore, looking for a business broker that can keep things private is vital.

2.      Consider a Sector Specialist

       Some brokers specialise in selling businesses in a specific sector or industry. There are significant advantages to using a sector specialist – getting more profits than expected.

3.      Review Contracts

       Some of these contracts look straightforward, but there are a lot of potential traps. For instance, a contract may be labelled in many names – engagement letter, instruction letter, and this makes business owners complacent and proceed to sign without independent legal advice. There is also no 14 day cooling-off period for business to business contracts.  Thus, engaging a lawyer to vet through the agreements is a way to safeguard your interest.


Get Impartial Advice from Desfran

As seen, there can be many loopholes during the transactions
when business owners wish to sell or buy a company. It is crucial that the
business broker is able to provide premium support and assistance throughout
every step of successfully selling or buying your business. At Desfran, we
simplify the processes to make your experience as smooth and free of stress as
possible – all with the utmost confidentiality. With more than a decade of
business sales and business consultancy experience under our belt, even green
entrepreneurs can start their businesses from scratch or acquire an established
company quickly.


Contact Us for a Consultation now.

Scroll to Top