Business brokers facilitate purchase and sale of businesses. Fees are charged by these brokers on the basis of the services provided by them. In other words, business brokers are firms or individuals working as intermediaries between the buyers and sellers of business concerns held privately.
Business brokers are also known as business transfer agents. The purchase and the sale price and the size of the business sold decides the fees charged by the brokers. Besides this fixed fees, an amount of commission is also charged by these brokers. The types of business brokers vary on the area of their specialization.
Some brokers have expertise in acquisitions while others specialize in mergers. Business brokers, while dealing with buyers of businesses enter into a buyer representation agreement with their clients. On the other hand, while dealing with the sellers of business, the business brokers sign a listing agreement.
Business brokers are of supreme importance if a buyer or seller of business is new to the business or if the buyer or seller is unknown to the person. Besides facilitating negotiations, these brokers also help in striking better deals with the help of a wide variety of contracts.
The business brokers make inquiries in the market with the aim of locating potential sellers and buyers of businesses. Because of their experience and expertise, the make available to their clients better prices to their clients. Business brokers have close contacts with large business corporations and some brokers also are experts in dealing in smaller businesses.
Business brokers have strong market knowledge. The dealings carried out by them are done on a confidential basis. The certified business brokers are trained to make correct valuations and appraisals of businesses. Their service are thus very essential for business owners because they do not normally have a clear idea of the exact worth of their business. Some of the services of business brokers are to prepare public listings of the business on sale and advertising the business and preparing papers necessary for ale of business. The brokers also check the financial capability of buyers in order to ensure their competence in buying the business.
In the U.S. , in some states, business brokers require a license in order to carry on business while in other states, a license is not required. There are also quite a few associations of business brokers in America. Some of them are the Association of Professional merger and Acquisition Advisors, Association of Business Broker in the states of Florida, Texas, California and others.
Last Updated on : 29th July 2013