Business brokers
A business broker is a person or firm that acts as an intermediary between sellers and buyers of businesses. Business brokers, also called business transfer agents, or intermediaries, assist buyers and sellers of privately held business in the buying and selling process. They typically estimate the value of the business; advertise it for sale with or without disclosing its identity; handle the initial interviews, discussions, and negotiations with prospective buyers; facilitate the progress of the "due diligence" investigation and generally assist with the business sale.
Contents:-
Agency relationships with clients and customers:-
Traditionally, the broker provides a conventional full-service, commission-based brokerage relationship under a signed listing agreement with a seller or "buyer representation" agreement with a buyer, in most states thus creating under common law an agency relationship with fiduciary obligations. Some states also have statutes which define and control the nature of the representation. These are then clients of the broker.
Agency relationships in business ownership transactions involves the legal representation by a business broker (on behalf of a brokerage company) of the principal, whether that person or persons is a buyer or a seller. The principal broker (and his/her agents) then becomes the agent of the principal who is the broker?s client. The other party in the transaction who does not have an agency relationship with the broker it the brokers customer.
Dual or limited Agency
Dual agency occurs when the same brokerage represents both the seller and the buyer under written agreements. Individual state laws vary and interpret dual agency rather differently.
If state law allows for the same agent to represents both the buyer and the seller in a single transaction, the brokerage/agent is typically considered to be a Dual Agent. Special laws/rules often apply to dual agents, especially in negotiating price.In some states (notably Maryland), Dual Agency can be practiced in situations where the same brokerage (but not agent) represent both the buyer and the seller. If one agent from the brokerage has a home listed and another agent from that brokerage has a buyer-brokerage agreement with a buyer who wishes to buy the listed property, Dual Agency occurs by allowing each agent to be designated as ?intra-company? agent. Only the principal broker himself/herself is the Dual Agent.Some states do allow a broker and one agent to represent both sides of the transaction as dual agents. In those situations, conflict of interest is more likely to occur.
Types of services that a broker can provide
Since each state\'s laws may differ from others, it is generally advised that prospective sellers or buyers consult a licensed real estate professional.
Some Examples:
Comparative Market Analysis - an estimate of the businesses value compared with other businesses for a similar type. This differs from an appraisal in that businesses currently for sale may be taken into consideration (competition for the subject business).Exposure - Marketing the business to prospective buyers.Facilitating a Purchase - guiding a buyer through the process.Facilitating a Sale - guiding a seller through the selling process.FSBO document preparation - preparing necessary paperwork for "Sale By Owner" sellers.Hourly Consulting for a fee, based on the client\'s needs.Preparing contracts and leases. (Not in all states.)Business Brokers and Sellers
Services provided to seller as a client
Upon signing a listing contract with the seller wishing to sell the business, the brokerage attempts to earn a commission by finding a buyer for the sellers\' business for highest possible price on the best terms for the seller. To help accomplish this goal of finding buyers, a business brokerage commonly does the following:
Listing the business for sale to the public, often on a Multiple Listing Service, in addition to any other methods.Based on the law in several states, providing the seller with a business condition disclosure form, and other forms which may be needed.Preparing necessary papers describing the business for advertising, pamphlets, tours, etc.Advertising the business. Advertising is often the biggest outside expense in listing a business.Being a contact person available to answer any questions about the business and to schedule showing appointmentsEnsuring buyers are prescreened so that they are financially qualified to buy the business; the more highly financially qualified the buyer is, the more likely the closing will succeed.Negotiating price on behalf of the sellers. The seller\'s agent acts as a fiduciary for the seller. This may involve preparing a standard offer to purchase contract by filling in the blanks in the contract form.In some cases, holding an earnest payment in escrow from the buyer(s) until the closing. In many states, the closing is the meeting between the buyer and seller where the business ownership is transferred and the businesses name is conveyed.
Business brokers attract prospective buyers in a variety of ways, including listing limited details of available businesses on their websites and advertising in business newspapers and magazines. Brokers also directly approach prospective buyers and sellers to gauge interest.
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