Is it Necessary to Use a Broker to Sell your Practice?
An easy question to answer…..absolutely not!
In fact, my gut feel is that the majority of professionals do not utilise a broker when it comes to selling their firms. Why? Probably for a couple of reasons; one being the associated cost, and two being the perceived lack of professionalism, service and reputation. Many brokers are tarred with the same brush as used car salesmen and real estate agents. For some brokers, that may be a fair comparison. However, for others, they have the real ability to add value to the process for any vendor. But, their service should be more than simply acting as an introduction agency, and it goes without saying that they should always have your best interests at heart.
Let’s take a moment to review how a practice broker should be able to assist you in the sale of your practice:
1. Initially, a broker should be able to provide advice around current market conditions, evaluate the options available to your particular circumstances and make a recommended course of action moving forward which should be more than simply recommending that you sell the business here and now. They can assist with your initial decision. If the only option provided by the broker is to sell sell sell now, then they may not be the broker for you
2. They can provide a template to assist with the collation of data in anticipation of preparing the Information Memorandum. Advice and proposed amendments can also be of assistance here
3. The broker can provide an indicative sale price based on the collated information about the practice. Whilst the vendor may have an opinion around what they want for the practice, it is worthwhile listening to the price guide provided by the broker if you are genuine about achieving a sale
4. They should prepare and manage the promotion and marketing of the listing
5. Upon receipt of enquiries, the dispatch of a legally prepared confidentiality agreement is essential. Again, this is performed by the broker
6. As enquiries build, the broker works through the list of prospective purchasers weeding out the pack to arrive at a handful of genuine, ready, qualified buyers
7. The next step is to facilitate the meetings between the vendor and a short list of prospective purchasers
8. A broker will then elicit offers and negotiate the transaction including terms and conditions on behalf of the vendor. Keep in mind, the broker will know what is commonly taking place in transactions, thus ensuring the vendor has a competitive advantage during this step
9. Once an offer is accepted, the broker should work with your solicitor to prepare the contract for sale. Whilst few brokers will be qualified solicitors, and it is possible to utilise a general business sale contract template, our recommendation is always to engage an expert in the area of professional practice contracts for sale. It can make or break the deal
10. As the process heads towards due diligence and settlement, the broker should continue to act as an intermediary and adviser for their client, working to obtain the best outcome possible for the vendor.
So, as will be evident from above, the sale process is quite complex and time consuming. Even if the vendor is happy to sell to the very first party that expresses an interest in the transaction, the processes that follows still requires knowledge and experience to ensure the very best outcome possible.
However, you can definitely go it alone without engaging a broker; you just need to work through the steps above. Or, if it all seems too much, or perhaps you only require assistance with part of the process, we would also welcome the opportunity to be of assistance.
To review the variety of services that we offer in respect of selling, merging or buying a practice, please visit our new dedicated practice broking website – www.robknightsbroking.com.au