Are you thinking about selling your company, but you are curious about how the payment process works? No doubt, you’ve put in all of the hours and effort over many years and may not be thinking about retiring or exiting the company.
But this raises important questions about how you should choose to sell your business and the kinds of fees you can expect to pay. Varying companies offering business brokerage or website brokerage services will charge in different ways.
For example, they might charge a retainer fee, a fee that is assessed when a final business is sold or an upfront fee. There are different pros and cons to each of these approaches but you should definitely be familiar with the possibility of what you might pay when your company gets listed for sale. From the perspective of selling your business, many advisors might want an upfront fee.
Why Does This Method Make Sense?
This shows that you are serious about selling the company and enables them to take the necessary actions to start the process, to invest time and money and marketing cost to sell the business. However, you should not have to pay an upfront fee to justify the firm taking action to sell your company. Seeking a knowledgeable website brokerage firm with a consistent track record of selling businesses and commissions that are paid out at the time of closing enables them to have appropriate cash flow and resources to dedicate towards selling your business when you decide to work together.
One of the other major benefits of receiving a commission from the perspective of the website broker at the close of the sale is that they will only take on situations in which they feel confident about selling the company. If you are being asked to pay an upfront fee by a business broker, you might not be able to tell whether or not they are sure or feel confident about their ability to sell your business. Upfront fees can vary significantly, so the broker might instead be using this as an incentive to receive cash flow and take on a new assignment even if they aren’t sure they can actually sell the company.
Your mergers and acquisitions firm or your business broker should be able to lay out their clear goals with you when deciding to work together. It can be very beneficial to have an initial consultation with a business like this so that you can get a sense of how they work and how they choose to partner with and assist sellers in the process of putting your business up for sale. Business brokerage firms typically should have experience in your individual industry and have a track record of success in selling other companies. you might be curious about what the difference is between the brokerage firm and an M&A firm.
In many cases, there are very few differences between firms that call themselves these titles and they will rely on their preference. Both firms will gather information about the business and speak with the owner prior to working together, including information about finances, employees, customers, unique challenges and unique benefits of your company. Reviewing this initial information and conducting a business valuation helps them to decide how likely it is that your company can sell and to assist you with putting together a solid package for listing the company for sale.