Everyone has heard of Brokers – Stock Brokers, Mortgage Brokers, even Marriage Brokers. But what is a Business Broker? It is a little known and less understood segment of the Real Estate industry. Simply put, a Business Broker is one who assists an individual (or company) in buying a business or helping a company sell their business – in concept not too different from a residential Real Estate Agent in the housing market. However, that is about the end of the similarity.

A FEW STATISTICS

There are about 25 million businesses in the United States. The vast majority have no employees – Real Estate salespeople, consultants, nannies, etc. Discounting these, there are about 5.6 million of which 20% are for sale at any one time. Ninety percent of these are offered “for sale by owner” – FSBO’s. Notwithstanding, over 50% of the businesses that sell are sold through Business Brokers according to the U. S. Department of Labor and the SBA.

BUILD vs. BUY

Every year, thousands of people consider entrepreneurship. The two routes are either to buy an existing business or start one from scratch. Each course has advantages and disadvantages that one should consider.

Starting your own business can be very rewarding but needs to have a unique product, technology, or service. Let’s face it, there are very few “new ideas” out there that have not already been tried.

Read More

Who are the primary players you need when selling your business. Just like in sports, the players on your team will make a big difference on whether you win or lose. If you were putting together a baseball team, you would not draft Wayne Gretzky to be your pitcher just because he has a well know name in sports. The same is true when building a team to help you sell your business. There are some important players you are going to need:

•  Attorney: Make sure your attorney has experience in business transactions. Even if an attorney has a well known name such as F. Lee Baily, Robert Shapiro, or Alan Dershowitz, that does not mean they are going to have the expertise you need for your transaction. You should interview several attorneys before making a decision. Find out how much experience they have in business sales transactions. Ask if they have worked on transactions similar to yours. Also, find out how much they think it is going to cost for their services. I have seen a lot of attorney’s create documents that are much “thicker” than necessary at a high cost to the client. Good sources for attorney referrals with an expertise in business transactions are: escrow officers that specialize in bulk sales; business brokers; and former business owners that have sold their business.

•  Accountant: Just like with the attorney you choose, you need to make sure you are using an accountant with an expertise in business sales transactions. You may know an accountant who is great at preparing a tax return, but that does not mean they will understand the intricacies of a business sale. Using the wrong accountant can literally costs you thousands of dollars.

Read More

If you are planning to buy a business in the near future, or sell one for that matter, then you are probably thinking about the price you may have to pay, scheduling business appraisers, collating legal documents, putting in an offer and so on. The list of things to do is indeed long. However, one if the things that very few people actually consider before their lawyers bring it up is the necessity of confidentiality agreements.

Confidentiality agreements are essential cogs in the mechanism of business acquisition because they protect both the buyer and seller just in case anything should go wrong a little further down the line.

The Nature Of The Confidentiality Agreement

Confidentiality agreements are legally binding documents that govern what can and cannot be disclosed to third parties. Obviously any potential seller is legally required to make full disclosure of all relevant details that may affect the sale of the business to the buyer, which is why confidentiality agreements are signed before the buyer can examine the business.

Confidentiality agreements are commonly drafted by lawyers and can be pages long, depending on the level of security required to protect the information that may or may not be disclosed. This is obviously dependent on the type of industry and nature of the business.

However, buyers may want to consult with third parties about future business issues to determine whether or not the acquisition would be worth their while and so it is common for any given agreement to be negotiated between the legal teams of both parties to decide what information must remain between the buyer and seller and what can be revealed to relevant parties, and they are usually named within the agreement paperwork itself.

Read More