Using a business transfer agent vs. Private sale
Are you thinking of selling your business, which can be a daunting experience if you are doing it for the first time, and are conflicted over whether you should use a business transfer agent or conduct a private sale?
This article will take you through the important factors you need to keep in mind to make this decision.
What is a business transfer agent?
While there is no set definition for a business transfer agent, a business transfer agent assists business owners in selling their business. They are also known as a business sales agent or simply business agents.
What do business transfer agents do?
You should know that the process of selling your business is packed with time-consuming tasks and you can face some unexpected obstacles, particularly if you are not familiar with the process and do not have the necessary guidance. Apart from finding buyers, there are many other aspects and stages of this process, such as preparing your business for sale, gathering the necessary documents and getting a business valuation.
What are the advantages of using a business transfer agent?
- Proven track records – If you select the right business transfer agent, which will have years of experience in the field of business transfer, particularly in the sector you are operating, it will help speed up the process and you will gain knowledge of the industry. This will increase your chances of getting more serious buyers.
- Knowledge of the industry – If you select a business transfer agent experienced in the sector you operate, they can pinpoint the areas of concern and also help you mitigate them if they impact the value of your business.
- Account manager – When you hire a business transfer agent, you will be allotted a dedicated account manager. An account manager will guide you through each of the steps and also provide you with regular updates.
- Connection in the industry – a good and reputable business transfer agent usually have databases of buyers and connections to buyers who are actively searching for suitable businesses. This will significantly cut down the time it will take to find and select serious buyers in the market.
- Other services – A business transfer agent will provide a range of services to you which includes a business valuation.
What are the disadvantages of using a business transfer agent?
- Limited control – using a business transfer agent might not be for you, if you want to have a more hands-on approach and want greater levels of control.
- Business transfer agent fee - a business transfer agent will charge a fee and commission. So if you are already skilled in the selling process and are able to attract serious buyers, hiring a business transfer agent may not be worth your while.
Important things to consider when doing a private sale
- Unlimited control – You will have greater level of control if you are selling your business privately without a business transfer agent. You will control how and to whom your business is being marketed.
- Managing overheads – You will not have to worry about a business agent fees and commission on sale. However, the process may take longer if you choose not to use a business transfer agent with a verifiable database of potential buyers.
- Selling confidentially – If you are the person who wants to sell their business confidentially, some business transfer agents have measures in place to advertise your business without compromising your business’s identity. However, if you are not using a business transfer agent, you will be open to the risk of disclosing the business is for sale.
Is there regulatory supervision of business transfer agents in the UK?
No. While in the USA, some states require agents to have a license, there is no such requirement and anybody can set themselves up as a business transfer agent.
Please note that the information provided on this page:
- Does not provide a complete or authoritative statement of the law;
- Does not constitute legal advice by Net Lawman;
- Does not create a contractual relationship;
- Does not form part of any other advice, whether paid or free.
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