What Are Business Brokers and What Do They Do? [Part 1]
What Are Business Brokers and What Do They Do? [Part 1]
What Are Business Brokers and What Do They Do? [Part 1]

It’s Wise to Have Your Own Broker and Lawyer Advising You

As a commercial real estate professional for over 30 years, I have never once bought or sold a piece of real estate without having a minimum of at least a broker and a lawyer involved in the transaction. In other words, I never sold my own real estate or did my own legal work, even though I had a real estate license and had done more transactions than many lawyers who worked for us. I wanted someone representing me alone.

Why Don’t People Know About Business Brokers?

Since the similarities between real estate brokerage and business brokerage are numerous, I started wondering as both a business and real estate broker why almost all commercial real estate is bought and sold using a only a broker. Few people know that business brokers even exist, and even fewer use them. After all, almost all businesses have some relationship with real estate—as either the business owns or rents real estate. That is why in 14 states business brokers are required to have real estate licenses.

Real Estate and Business Brokers Defined

business brokers and real estate brokers in baton rougeSo, let’s first look at what a business broker is by definition and then what a business broker does. We will cover why you should use one business broker in part II of this article. Wikipedia defines a business broker as a person who “assists buyers and sellers of privately held businesses in the buying and selling process.” If you substitute “real estate” for “business” in the above definition, you have the definition of a real estate broker by Wikipedia. So, very similar. As I see it, the big difference between the two is that business brokers almost always deal with real estate while most real estate brokers do not deal with the sale of businesses.

So, what does a business broker do? Why are they worth the money? First and foremost, the business owner has a business to run and selling a business takes time—a lot of it.

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What Does a Business Broker Do?

One of the most important functions of a business broker when selling a business is to get a proper value for the company and its real estate. A business broker using experience and databases will do a valuation and use objective observations about the company’s readiness for sale.

Next, there is the marketing of the business. This can be tricky as owners want to market their business to be sold but may not want any of their customers or employees knowing. Another responsibility is the screening process. Business brokers are then responsible for screening all interested buyers to ensure they meet the proper financial and experience requirements to purchase.

After the initial offer, there are negotiations with the buyer and their attorney, in conjunction with the seller’s attorney. Finally, there is the due diligence period where the broker is the conduit for information between buyer and seller. It takes a lot of time if done well. This alleviates the business owner who rarely has sufficient time to follow through in a timely manner while running his/her business. The business broker, like the real estate broker, is the quarterback to keep things moving and get to a conclusion.

Next up, why use a business broker and what you should look for.

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Kathryn Baton Rouge Real EstateCRE blog posts by Kathryn

commercial real estate advisor bio

Camm Morton of Baton RougeAbout Camm Morton – Camm Morton, Owner/Principal with VR Business Brokers has a 30-plus year history spearheading complex office, industrial, retail, land and investment ventures throughout the country. He has established an exceptional record of noteworthy accomplishments including bold mixed-use projects, Traditional Neighborhood Developments (TNDs) and the high-profile and successful renovation of the historic Hilton Baton Rouge Capitol Center in downtown Baton Rouge. Camm has also owned and successfully developed real estate in 29 other states and Puerto Rico, including his own company and a billion dollar NYSE-traded REIT (Real Estate Investment Trust). If you would like to contact Camm, you can call him at 225.663.5999 or email him at cmorton@vrbatonrouge.com. Follow his blog for information on business sales, mergers and acquisitions and exit planning.

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