Why a Business Broker May Not List a Business For Sale

10.10.2009 20:52

Business brokers typically work very hard to attract listings. The business brokerage profession is quite demanding and brokers, accordingly, need to be somewhat discerning in the listings they take on.

The following is an examination of some of the reasons why a business broker may not take you on as a client if you are looking to sell.

Price it is to be listed atA business broker will only take on a listing if he or she thinks that they have a reasonable chance of selling it. If the price is too high and the broker feels that that the company is overpriced, they may not take you on as a client.

Geographic locationSuppose you live in Niagara Falls, Ontario or Kitchener or Guelph then perhaps a Toronto business broker may not work with you simply for geographic reasons. It may be too far to travel to show the operation to buyers or perhaps business brokers in Toronto might not be as familiar with other markets further out of the GTA.

Conversely, if you are thinking of selling a business in Toronto then working with a brokerage that operates out of the GTA may be a wise choice.

Conflict of interestSuppose you want to sell a manufacturing business and the broker you would like to deal with has a relative or associate that is a direct competitor. This would be reasonable grounds for the intermediary to take on the listing.

No financial statementsBusiness brokers use financial statements to demonstrate a company's financial viability to potential buyers. If a venture is a cash-only business or has very poor financial records then the professional intermediary may decide that this venture may be too difficult to sell.

Unethical sellerSometimes, an owner may give the impression of being unethical or willing to push boundaries in their dealings. A reputable professional would most certainly stay away from dealing with such people.

A business that is too smallSome micro-businesses are simply not cost-effective enough to justify engaging the services of a broker. If you are thinking of selling a home-based company such as a small gift basket enterprise, then this is probably the type of operation that a broker may not list.

Unrealistic time expectationsIf an owner expects to sell a business in a very short period of time, then a business broker may decide not to list it rather than not meet unrealistic expectations. Many clients approach a brokerage with a need to sell a business, sometimes very urgently. This being said, they are typically sold in a matter of months and not weeks.

Selling a small company can be a process that takes time and certainly a good amount of patience. Work with a reputable (and qualified) business brokerage professional to discuss what it would take to properly sell your company.

For more information on selling a company in Ontario, Canada please contact a reputable business intermediary to assist you with the process.

A._Brown