What’s the real value of using a business broker to a business owner/seller? Is it generating inquiries and bringing buyers to the table, drafting the purchase agreement, negotiating the deal terms, and obtaining SBA or bank financing for the transaction, or is there more? While all these things are true, they are what a business broker does in every transaction. The real question is what is the real value they deliver to the business owner-seller?
It’s often hard to pin down exactly what “value” a business broker brings to a transaction in actual dollars and cents, but we recently closed a transaction where the value brought by the broker was easy to measure. Pacific Business Sales recently sold a very successful commercial plumbing company and delivered an offer for $1.4 million and much more cash at closing, more than an LOI from a private equity firm the seller had negotiated himself over a year earlier
The LOI the seller negotiated on his own ultimately fell through at the last minute when the seller discovered the cash at closing was going to be nearly half of the LOI value after working capital was to be included in the deal, a withholding for potential future liabilities, and a stock rollover.
18 months after the deal died, the seller-owner engaged Pacific Business Sales to represent him in the sale of his business.
Pacific Business Sales aggressively marketed the business to entrepreneurs, equity groups, and search funds. The business was marketed both on public business-for-sale websites such as bizbuysell.com, bizquest.com, loopnet.com, and others as well as non-public websites only available to private equity groups. Email blasts were also sent to the BizBuySell buyer email list and the Pacific Business Sales buyer email list.
Pacific Business Sales also prepared a comprehensive CIM (Confidential Information Memorandum) for the business. The CIM is a confidential prospectus sent to prospective buyers after they have signed an NDA and provided a financial statement.
Six offers were presented to the seller/owner and the offer that was accepted was over $1.4 million higher than the LOI the seller had accepted 18 months earlier. The offer that was accepted had substantially higher cash at closing and better terms than the LOI that had been accepted and then fell through.
The offer was in the form of a stock sale which provided significant tax benefits to the seller Pacific Business Sales brought this owner more cash a closing, better terms, facilitated an extensive Due Diligence process, and managed the closing process with attorneys representing the buyer and seller and the SBA lender and the seller was able to retain more cash for retirement after the sale due to the tax savings benefit of a stock sale.
Pacific Business Brokers located in Orange County works hard to meet the needs and goals of its clients throughout California.
