Top 10 Reasons Business Owners Need a Business Appraiser & a Business Intermediary: Expand Exit Strategy Opportunities

Most business owners who have not been involved in a transaction before are likely unaware of the various exit strategy options that may be available. Professional business brokers and business appraisers are able to outline the possibilities for the business owner and the likely benefit of each option. Owner financing is an often used and attractive way to structure an acquisition of a business. This may eliminate the need for bank financing and allow the seller the opportunity to defer taxes and earn interest on the seller finance note that results in total deal proceeds in excess of the initial transaction price. An employee stock ownership plan (ESOP) is another exit strategy suitable for some businesses that allows the seller to transfer ownership, often times in a tax effective manner, to the employees of the company (via a trust). A business broker will likely identify potential strategic acquirers for a business (if appropriate)—acquirers whose synergies may make an acquisition operationally and financially attractive. A business broker may also identify financial buyers such a private equity groups (typically for larger transactions) who may already have a platform in the seller’s industry. This allows for a sale to sophisticated buyers who generally have ready access to capital for acquisitions.

In addition, a business broker will be able to advise the seller on options such as an earnout, whereby the seller is paid compensation over time based on specific performance measures of the company, or consulting agreements that allow for residual income to the owners after the sale of the business. These opportunities and strategies would likely be overlooked by a business owner pursuing a “for sale by owner” strategy, their legal counsel, and their accountants. Professional business brokers will help the business owner expand their exit strategy opportunities and provide options that may otherwise go unnoticed.

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