The secret of getting ahead is getting started. — Mark Twain
What Are Business Brokers?
Business brokers, also known as business intermediaries, help buyers and sellers of privately held small businesses transact the sale of a small business. Essentially, business brokers value businesses; confidentially advertise the business for sale; vet and qualify prospective buyers; enable the progress of the due diligence (investigation into business records to assure accuracy and legitimacy of the business as advertised) and generally assist with the business sale.
In California, business brokers are regulated by the Department of Real Estate. Why real estate? The reason is that oftentimes a business sale will involve a lease transfer or the sale of commercial property. Agency relationships in a business sale usually involves the seller’s broker. The buyer may also be represented. Business brokers who represent both the buyer and seller are known as dual agents.
Business brokers are also part of national and state professional associations. Nationally, brokers belong to the International Association of Business Brokers (IBBA). In California, the California Association of Business Brokers (CABB) provides education, training and advocacy. Mission Peak Brokers belongs to both associations.
What Do Business Brokers Do?
Simply stated, business brokers sell businesses. Broker services vary depending on the type of business sold, the locality, governing laws as well as the practice and skill set of the broker. Given a typical small business sale process last 6 to 12 months, one of the most significant service that business brokers provide is to help their sellers stay focused on running their business during the sale process. For business buyers, a business broker guides the buyer through the labyrinth of deal-making, due diligence, securing financing, relevant agency applications and effectively managing the actual business transfer.
The most common services provided by a broker to a client are:
- Establishing the Most Probable Selling Price Valuation (MPSP) by analyzing the business’ financial records going back 3-5 years.
- While there are a variety of valuation methods, the most common methods are Seller’s Discretionary Earnings (SDE), EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) and Asset-Based valuations.
- Package the listing which entails gathering all essential business and financial records to analyze the business and to present to prospective buyers for their due diligence investigation.
- Create a report that comprehensively presents all components of the business for prospective buyers. This document is known as either an Information Memorandum or Confidential Business Review.
- Secure financing if possible through Small Business Administration (SBA) lender networks.
- Market the business listing to prospective buyers on business listing websites, email campaigns to buyer lists, relevant industry groups and through social media marketing.
- Screen and qualify buyers for relevant qualifications, licenses (if applicable), ability to financially complete a purchase. Brokers will also secure Non-Disclosure Agreements from prospective buyers to maintain confidentiality of the sale.
- Once an appropriate buyer is identified, the business broker will coordinate negotiations and provide deal structuring advice. Thereafter, they will manage the transaction through the entire process through close of escrow.
- Provide post-sale support to ensure a smooth transition between the buyer(s) and seller(s).
Mission Peak Brokers sell businesses throughout the Bay Area. While we have experience selling a variety of Bay Area businesses, we specialize in Gas Stations, Liquor Stores or Convenience Stores and Restaurant/Bars. We sell businesses with commercial real estate as well.
As one of the Bay Area’s most successful business brokerages, Mission Peak Brokers attract more qualified buyers to your business than other brokerages. We have several hundred pre-qualified buyers looking for a businesses to buy. We reach thousands more through our website, top business-for-sale websites, commercial real estate listing sites, social media and our professional associations. We carefully pre-qualify our buyers including requiring confidentiality agreements before obtaining information on the business.
Mission Peak Brokers is also unique as a Bay Area business brokerage. We are one of the only brokerages in the area that provides business, commercial real estate and loan brokering (commercial real estate loans and SBA loans) for a comprehensive level of service to our clients. Our closing ratio for loans is 99% which helps us effectively guide transactions to successful outcomes.
Given our extensive experience and success rate (over $270,000,000 sold), we welcome the opportunity to use our expertise to help you achieve your entrepreneurial goals. Check out our ratings. Contact us today to help build your dreams tomorrow.