It is important to choose the right business broker to help you sell your business in Dallas. This helps ensure you are able to understand the full value of your company and maximize your ability to sell for fair market value or greater. In this review, we take a close look at everything you should know about Dallas business brokers, including what they are, what they do, how much they charge, and how to choose the right one.
What is a Dallas Business Broker?
A Dallas business broker is a professional who helps business owners in Dallas, TX and the surrounding areas sell their company. In essence, they serve as an intermediary between the seller and the buyer, and they ensure the process goes along smoothly. Most commonly, business owners in Dallas who are selling their company will hire a business broker. However, many Dallas business brokers also work with buyers as well.
What Does a Dallas Business Broker Do?
We recommend a full-service business broker. The services of a Dallas business broker should include a professional business valuation, the successful implementation of a confidential marketing strategy, and assistance through the due diligence and closing stages.
Experienced Dallas business brokers have an in-depth understanding of the local market for businesses. Subsequently, they are the best in the business when it comes to determining the worth of your company. Essentially, they conduct an appraisal on your company. They may use a multitude of considerations to determine your value. Ultimately, the method they use depends on the type of valuation. The three most common types of business valuations are:
- Market-based valuation
- Asset-based valuation
- Income-based valuation
Depending on the valuation type, your Dallas business broker may consider recent sales data in your industry and area, asset value, and profits, along with non-financial considerations such as your exact location in the Dallas (or surrounding) area, growth potential, and reason for selling.
Confidential Marketing Strategy
The primary objective of Dallas business brokers is to ultimately find a buyer who is able and willing to pay fair market value (or higher) for your company. This could be a buyer who is familiar with and from the Dallas area or a buyer from outside the area.
Moreover, they should use only confidential methods to find potential buyers. Otherwise, news of your sale going public could cause business disruptions and cause panic among employees, suppliers, and customers. There are several methods a Dallas business broker may utilize to find a buyer in a confidential manner. Notably, they may use private databases, personal connections and contacts (i.e. other brokers, investors), and other private channels.
Due Diligence and Closing Assistance
Lastly, Dallas business brokers assist their client (either the business seller or the buyer) through the due diligence and closing process. Specifically, this refers to the period in time after the buyer signs a letter of intent (LOI) that outlines the purchase terms. The business broker is there to assist with any challenges their client faces.
They also ensure the process moves along quickly. For instance, they may implement a due diligence roadmap, which highlights the steps that need to be accomplished to help keep things on track. The business broker also helps their client in the event they face any setbacks, challenges, or complexities during closing or while transition ownership (and training the buyer) of the company post-sale.
How Should I Choose a Dallas Business Broker?
It is essential to choose the right broker that you feel comfortable working with throughout the sale. There are a number of factors that you should take into consideration when you choose a Dallas business broker. Additionally, we recommend consulting with a broker before you agree to their services.
- Experience: Everyone has to start somewhere, but you do not want your business to become a learning mistake for an inexperienced business broker who may not fully understand how to navigate the complexities involved with a business sale.
- Location: If you are selling a business in or around the Dallas area, then you should choose a Dallas business broker. They will have a better understanding of how to find potential buyers in the local area.
- Reviews/reputation: if other clients have had a bad experience, then the chances are you will as well. Be sure to choose a broker who has good reviews in the Dallas area and/or is willing and able to provide references and case studies.
- Communication: You want a Dallas business broker who stays in constant communication with you, updating as there is progress with the sale. This helps you avoid time-consuming and costly setbacks where the broker is not putting in the work to sell your company in a timely manner.
How Much Do Dallas Business Brokers Charge?
The simple answer is it depends. There are two primary types of fees a Dallas business broker may charge — upfront fees and success fees. An upfront fee, as the name suggests, are payments you make before the broker provides any services. As a result, you take more risk, and the upfront payment may disincentivize the business broker.
Success fees are different in the sense that you do not pay until the sale is complete, so you have essentially no risk as it pertains to paying your Dallas business broker. Success fees can vary from $1,000 to more than $50,000. For success fees, the business broker typically takes between 8% and 12% of the final sale price.
When Should I Consider a Dallas Business Broker?
There are numerous complexities involved with the business sale process. For this reason, we recommend a Dallas business broker anytime you are contemplating a business sale and/or planning your future exit strategy. Although a CPA and mergers and acquisitions (M&A) attorney are helpful, they are not able to provide the expertise and training that a qualified and experienced Dallas business broker can offer.
Sigma Mergers and Acquisitions Has 20+ Years of Experience in The Dallas Area
Here at Sigma Mergers and Acquisitions, we are Dallas business brokers with more than 20 years of experience and over 600 businesses successfully sold. If are selling a business in Dallas and would like a free, no-obligation business valuation from our team, then contact us today.