I’m going to take you through what a business broker is and how they work and at the end of the article I’ll give you my top tip for finding the best broker.
1. What is a Brokerage Business?
A business broker is someone who helps in the sale of businesses. This includes the marketing, presenting of the business, communication, negotiation, due diligence and closing the deal.
2. Ecommerce Business Brokers
Online business brokers, myself and my industry colleagues, usually have multiple years of ecommerce experience in building, buying and selling brands, just as we do at Ecommerce Brokers with 10 years of business building, buying and selling experience. This means brokers have personal and specific insight into the businesses they list, which means they can more thoroughly sell and market their listings to buyers. This is the main shortcoming of investment bankers and standard brick and mortar business brokers.
3. How Do Business Brokers Work?
To keep it simple, they work on commission! That’s how you know if a broker is good or not to earn a living as a broker, especially over many years you need to be selling businesses consistently as if you don’t sell, you don’t get paid and make a living.
4. What Should I Expect From a Business Broker?
First you need to find the right broker. I’ll give you my top tip for finding a good broker.
Once you’ve found the right broker you will sign an exclusivity agreement. This agreement protects you and the broker as it ensures that if they find a buyer for you and they help you close the deal they will in fact get paid. It also protects your businesses confidentiality and limits the time they can work for you. On average most exclusivity agreements last for 6 to 9 months which takes into account the organizing of the listing information which can take from as little as a few days to 2 weeks. Then comes the marketing process where the broker will go out and actively look for buyers. Across the top 10 online business brokers this usually takes 1-3 months. The strength, growth, sustainability, age and profitability of the business massively determines if the business will sell fast or not.
That being said, over the next 30-60 days of listing buyers will come in and the online business broker will liaise with these buyers, negotiate price and terms and come to you, the seller with their offers and information. These buyers should all be under NDA while viewing your confidential business information. Then comes the buyer, seller and broker calls. On these calls you as the seller will be getting to know the buyer and answering a series of questions about your business. The online business broker will prepare you for these calls prior.
After a few calls like this with different buyers you and your broker will decide on the strongest buyer and move forward on an agreed upon price and terms. This final negotiation step is where online business brokers really earn their money.
5. Best Online Business Brokers
On average at Ecommerce Brokers we successfully increase the sale price of a business during negotiation by up to 35% and are able to strike very favorable deal terms for sellers. This type of negotiation really only comes with experience in buying and selling online businesses for over 10 years. If your online business broker is negotiating 20-35% more money for your business and only charging 10% on average their services are more than worth it!
After this you’ll sign an LOI, complete due diligence and the broker will help with the closing of your business through legal and funds transfer. After this the broker gets paid their roughly 10% commission.
6. How Do I Choose a Business Broker?
- You need to ensure that your broker has owned and operated online businesses before otherwise they will struggle to fully understand and serve you as a client. Someone who doesn’t have ecommerce experience likely does not have the knowledge or network required to get your business sold!
7. Should I use a business broker?
If you are looking for an online business broker look no further as Ecommerce Brokers is here for you. Follow this link and we can get your business listed and a valuation within 24 hours.
8. How do I choose a business broker?
Base your decision on the experience, testimonials and successful exits of the broker. Book a call with a broker here.
Now I have a question for you. Would you use an online business broker? Let me know in the comments below