A Costly Lesson in DIY Selling
I recently had a client share a cautionary tale about his uncle’s experience selling a business. The uncle decided to sell the business on his own without a broker to avoid paying what he felt was an exorbitant commission fee. Unfortunately, this attempt to save money backfired. He ended up selling the company for far less than it was worth, even though it was more asset-heavy (and arguably more valuable) than another business I sold for my client. My client later told his uncle that had he hired me as a broker, I likely would have secured a much higher sale price (even after paying my commission) and made the transaction go much more smoothly overall.
A Broker’s Value Can Exceed the Fee
This story isn’t unique – many owners think skipping a broker will save them money, but often the opposite is true. Professional business brokers bring valuation expertise and negotiation skills that can dramatically improve the outcome of a sale. In fact, research indicates:
Higher chance of success: Owners who try to sell on their own have a 60–70% lower chance of successfully completing the sale compared to those who work with an advisor or broker.
Higher sale prices: Businesses sold with the help of a broker or advisor achieve 6%–25% higher sale prices on average, more than enough to cover a typical broker’s fee.
In short, a good broker often pays for themselves by getting you a better deal. They know how to find serious buyers and bid them up to maximize your proceeds. By underpricing or mismanaging negotiations, do-it-yourself sellers can leave a lot of money on the table – exactly what happened in my client’s uncle’s case.
Smoother Sales with a Broker’s Guidance
Beyond the higher price, using a broker also makes the sales process far smoother for an owner. Selling a business is complex and time-consuming – almost a full-time job in itself. Studies have found that owners who self-represent end up spending 20–30 hours per week on sale-related tasks (marketing the business, fielding buyer inquiries, handling paperwork, etc.) while still trying to run their company.
It’s an incredibly long and stressful process to handle alone. A broker, however, handles the heavy lifting: preparing documents, screening and qualifying potential buyers, coordinating due diligence, and negotiating terms on your behalf.
This not only speeds up the deal but also frees you to focus on daily operations. In my own practice, I’ve seen how having a broker involved leads to far less stress for the seller – deals stay on track with fewer hiccups and headaches.
Conclusion: More Insights to Come
The bottom line is that trying to save a commission can cost you much more in the end, both in lost profit and added stress. My client’s uncle learned this the hard way, and his experience highlights why a broker’s expertise is worth the fee. In future posts, I’ll explore additional benefits of working with a professional broker – from maintaining confidentiality to finding the right buyers – so stay tuned for more insights on achieving a successful business sale.