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Archive for August, 2010

Why do Business Brokers get 10% and Real Estate Brokers get 6%

By Hoke - Last updated: Sunday, August 15, 2010

Ten Percent is the longstanding traditional Business Brokers Commission. Why? It’s the Market Fee that almost everyone else charges.  Why do Real Estate Brokers get 6%? It’s the Market Fee that almost everyone else charges. Is 10% too high? Aside from the required Accounting and Financial background, here is our take on this issue. The […]

Minimum Broker Fees

By Hoke - Last updated: Sunday, August 15, 2010

Because Business Sale transactions values can sometimes go below $50,000 most Business Brokers charge a Minimum Fee that ranges from $5,000 to $15,000. The Minimum Fee is typically described in a sentence that states “… 10% of the transaction amount or the Minimum Fee whichever is higher”.

Some Brokers offer 5% and 6% Commissions

By Hoke - Last updated: Sunday, August 15, 2010

Most of the 5% to 6% Commission Brokers I’ve met are Residential Real Estate Agents anxious to get a Listing or try something new. They assume Business Listings get the same commission as selling a home. While selling a home and business require the same Real Estate license, the skill sets and marketing venues are […]

When Will Open Listings Work?

By Hoke - Last updated: Tuesday, August 10, 2010

An Open Listing where the Business Seller recruits multiple Business Brokers on a “whoever gets the sale gets a Commission” can be successful in a simple transaction where the Business Seller is confident they can manage the sales process, so Business Broker quality and also confidentiality is less important. It helps if the Business Seller […]

What Due Diligence Documents Do Buyers Ask For?

By Hoke - Last updated: Sunday, August 8, 2010

Due Diligence is really about having the Buyer feel comfortable with the business acquisition. Each Buyer has a different threshold to feel enough comfort to buy the business. The amount of Due Diligence documentation is up to the Buyer and Seller. The actual Due Diligence List can be negotiated and mutually agreed as part of […]

Historical Comparison Method of Business Valuation

By Hoke - Last updated: Saturday, August 7, 2010

This method relies on Actual Historical Sales Comparisons or ” Sales Comps” of similar businesses. Our favorite three sources of Historical Sales Comps are Pratt’s Stats, Bizcomps, The Business Reference Guide and the Bizbuysell Valuation Report. Pratt’s Stats and Bizcomps are the most comprehensive. The Business Reference Guide and the Bizbuysell Valuation Report also provide […]

Does A Seller Really Need A Business Broker?

By Hoke - Last updated: Friday, August 6, 2010

As a successful Business Owner you are an expert in your industry and dealing with your Customers. No one knows more than you about your business. So why have a Business Broker sell it? Fair question. Selling a business is a different paradigm from operating the same business. Selling a business is a bit like […]

Leases: A Cautionary Tale

By Hoke - Last updated: Friday, August 6, 2010

If you have decided to sell the business, why renew the lease? You have an “excellent” relationship with the Landlord. Here is a not so uncommon cautionary tale. Ready to retire, the Seller put his excellent, very profitable, key location retail business on the market. The Business was valued at about $600,000. He reasoned that […]

Starting With A Higher Ask Price

By Hoke - Last updated: Thursday, August 5, 2010

If the “start with a higher price and see what happens” approach is taken, then the Seller and Business Broker should maintain close communication. The Business Broker should be providing Buyer comment feedback to the Seller. Adjustments may need to be made on a timely basis to prevent the business listing from becoming “stale”. This […]

Buyers Are An Informed Group

By Hoke - Last updated: Thursday, August 5, 2010

In today’s Internet age, the typical Business Buyer is well informed. They have been looking at tens or hundreds of businesses for sale and understand more about Business Valuation than most Business Sellers who have not conducted such an intense investigation prior to deciding to put their business on the market. The typical Buyer intuitively […]