What Is a Business Broker: Why Is Selling My Business Hard?

Selling a business is far more complex than listing it on a marketplace and waiting for offers. When I talked to business owners who are selling a company for the first time, they often underestimate the steps involved.

Many things are misunderstood, from valuing your company and preparing detailed financial documents, to confidentially marketing your business and negotiating with potential buyers.

That's where a business broker comes in. In this article, we'll break down:

1. The Hidden Complexities of Selling a Business

2. How a Business Broker Adds Value at Each Stage

3. What First-Time Sellers Should Know

1. The Hidden Complexities of Selling a Business

Valuation Challenges: Determining a fair market price involves more than multiplying annual revenue by a number. You need to account for discretionary expenses, owner's benefits, industry trends, and growth potential. Mistakes here can leave you with a sale price below your business's true worth or an overpriced valuation that drives away good buyers.

Confidentiality Risks: If your employees, customers, or suppliers learn your business is for sale too early, it can damage morale, disrupt relationships, and even scare away buyers.

A seller called us because she had listed her business for sale, and buyers had used a Google image search to find the name and location of her business. One of them visited their office without an invitation, and all of the employees found out that the company was for sale.

Maintaining strict confidentiality requires skill, legal safeguards, and careful communications.

Finding Qualified Buyers: Identifying serious buyers—those with the right financial resources, industry experience, and a genuine fit—is like finding a needle in a haystack. Broad advertising can attract tire-kickers, while overly narrow outreach can miss ideal prospects.

Negotiating the Deal: From letters of intent to purchase agreements, each negotiation presents legal, financial, and strategic pitfalls. One misstep can cost thousands (or tens of thousands) of dollars, or even derail the entire sale.

Due Diligence Demands: Buyers will scrutinize every aspect of your operation, including financials, customer contracts, leases, intellectual property, and more. Preparing for and managing this phase takes significant time and expertise.

2. How a Business Broker Adds Value at Each Stage

1. Accurate Valuation & Pricing

   • Brokers use standardized methods like Seller's Discretionary Earnings (SDE) and market comparables to arrive at realistic valuations.

   • They recommend adjustments to maximize your net proceeds (for instance, documenting owners' perks as add-backs).

   • They can also outline a few tips to help you get your business ready to sell

2. Confidential Marketing

   • Each business listing should have its own unique marketing plan. A good business broker will take the lead on developing the marketing strategy and materials.

   • Brokers craft anonymized information packages and tap into a vetted network of buyers to protect secrecy.

   • They manage inquiries and vet leads, so you only meet good candidates.

3. Screening & Negotiations

   • Brokers conduct initial buyer interviews, verify financial capability, and negotiate deal terms that align with your goals.

   • They act as an impartial facilitator, smoothing communications and preventing emotional missteps.

4. Due Diligence Management

   • Brokers assemble and organize all required documents, coordinate site visits, and troubleshoot buyer questions.

   • Their involvement speeds up the process and reduces the risk of surprises that could stall or cancel the sale.

5. Closing & Transition Support

   • Beyond signing day, brokers can assist in managing escrow, facilitating fund transfers, and transferring operational responsibilities.

   • They ensure the transition is structured to preserve employee and customer confidence.

3. What First-Time Sellers Should Know

• Expect a 6–12 Month Timeline: Even well-prepared businesses often take at least six to 12 months to sell. Rushing the process typically means accepting a lower price. To put it in perspective, the financing, lease assignment, and escrow time frames can be 3-4 months. That's not even considering the time it takes to find a buyer, negotiate the deal, and complete due diligence.

• Budget for Professional Fees: Broker commissions typically range from 10% to 15% of the final sale price. While this may feel substantial, the net gain of a higher sale price and smoother process often outweighs the cost.

• Stay Involved—but Delegate: You know your business best, but a broker's expertise frees you to keep daily operations on track while they handle the sale process.

• Professional Organizations - Find a broker that is a member of the California Association of Business Brokers (CABB) and/or a member of the International Business Broker Association (IBBA).

Bottom Line: Selling your business the first time is a marathon, not a sprint. A skilled business broker brings industry knowledge, confidentiality protocols, negotiation savvy, and project management to your side, ensuring you maximize value and close with confidence.

Ready to learn more? Contact Sacramento Business Brokers for a confidential consultation about selling your business.