Contact Us

Choosing The Right Type of Business Broker To Sell Your Company

iStock_000017850437XSmall (2)
This articles gives the advice of an experienced UK business broker on finding the right type of broker to sell your company, and how much you should expect to pay.

As a business owner setting out on the process of selling a private company how do you decide on the right type of business broker to assist with the sale? What level of fees should you expect to pay? There are different types of business broker operating in the UK market with different approaches to service and fees. This post will describe the main types of broker and help you pick the right one for your company.
 
The Three Main Types Of UK Business Broker
 
Advertising Based Agencies

Agencies of this type rely almost exclusively on press and web advertising to generate interest in your business. Their websites holding long lists of businesses for sale make them easy to recognise.

Upfront fees will be low, typically no more than £2000 plus VAT and in some cases zero. The commission on eventual sale may be as high as 8% of the selling price achieved. A long period of exclusivity, at least a year, can be expected.

This type of agency is most suitable for a business with sales of less than £500k and profits less than £100k.

The downside of the advertising based agency is that there will be limited or no support through the sale process. After the first meeting with the agency’s sales manager most of your contact with the agency will be through a call centre. There is unlikely to be anyone from the agency present at meetings with potential buyers. You will typically be left to negotiate and progress the sale with the help of your accountant and legal advisor.

Traditional Business Brokers

This type of broker will offer a more comprehensive service. Considerable effort is put into preparing detailed sales particulars and financial forecasts for your company. The broker should research the best buyers for your company and approach them directly under cover of a confidentiality agreement. The best brokers will attend every meeting with a potential buyer.

An upfront fee of £5000 plus VAT and a commission on eventual sale of around 5% (less for larger businesses) would be typical. An exclusivity period of at least 6 months should also be expected.

Brokers of this type will typically act for businesses with sales up to £10 million and profits up to £1 million per year.

Professional business brokers are good for generating multiple offers and achieving a strong selling price for medium size private companies. The approach is almost identical to that used for larger companies.

Corporate Finance Advisors

Corporate finance advisors will typically be part of a large chartered accountancy practice or a “boutique” agency staffed by accountants and former investment bankers. Websites will be corporate in style and contain potted biographies of key staff setting out their qualifications and credentials. The corporate finance advisor will research the best buyers for your company and approach them directly under cover of a confidentiality agreement.

Fees for this type of advisor will typically be £10-15000 upfront often structured as a monthly retainer. Success fees will be in the 2% to 5% range depending on the size of the business to be sold.

Corporate finance advisors will typically focus on companies of at least £10 million turnover with profits of £1 million plus per year.

This type of advisor is suitable for companies looking to find a large corporate buyer. The benefits of using a corporate finance advisor are primarily prestige by association and high levels of service.

 

If you are interested in finding out more about these and other issues relating to the sale of a private company one of our business sale experts would be delighted to talk to you in complete confidentiality. Click CONTACT ME to book an initial phone conversation or call us on 01604 432964.

 
We welcome comments on posts, and questions from our readers. Use the “Leave a Reply” box below. We answer all reader questions within 24hrs. If you would like to be informed about new posts on the theme of selling a private company click the “Subscribe” button at the right hand side of this page.

4 comments on “Choosing The Right Type of Business Broker To Sell Your Company

  1. Pingback: Warning Signs When Choosing a Business Broker | Select Business Sales

  2. Pingback: The Main Steps in Selling a Business | Select Business Sales

  3. Pingback: How to Pick a Business Broker | Select Business Sales

  4. Pingback: Realistic Valuations of Private Companies | Select Business Sales

Leave a Reply

Your email address will not be published. Required fields are marked *

*

* Copy This Password *

* Type Or Paste Password Here *

21,897 Spam Comments Blocked so far by Spam Free Wordpress

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

back up ↑
UA-35460329-1