Selling to a broker's buyer, a direct buyer or your own staff: comparing your options
Three common ways small business owners sell, side by side. Privacy, cost, price, speed and what happens to your team.
By There's no single right way to sell a small business. The best route depends on what matters most to you: the highest possible price, privacy, speed, looking after your team or staying involved. Here's how the three most common routes compare.
Listing with a business broker
Strengths: a broker can market your business widely, create competition between buyers and handle much of the process. For some businesses that competition lifts the price.
Trade-offs: public listings can reach staff, customers and competitors, the broker's commission comes out of your proceeds, and you may meet many enquirers who never buy.
Selling directly to a buyer
Strengths: it's quieter, there's no broker commission, and you deal with the decision-maker from the start. It suits owners who value privacy and a straightforward process.
Trade-offs: there's no competitive process, so you need your own accountant and solicitor to check the price and terms carefully.
Selling to a staff member or manager
Strengths: continuity for customers and the team, and a buyer who already knows the business well.
Trade-offs: staff often can't raise the full price upfront, so part of it may be paid over time, which leaves you carrying risk after you've stepped away. Relationships can also become complicated if things don't go to plan.
Mixing approaches
Some owners talk to a direct buyer while also getting a broker's opinion on value, or pay an adviser a fixed fee to review an offer. Just check any agency agreement before talking to buyers outside it.
Questions to decide your route
How important is privacy? How much time can you give the process?
How much risk are you willing to carry after the sale? How important is it that your team stays?
Answering these honestly usually points to the right path.
Your checklist
What to do next
- Rank privacy, price, speed and team continuity
- Talk to your accountant about each route
- Check any existing agency agreement
- Consider fixed-fee advice for a direct offer
- Get independent advice before agreeing to deferred payments
Example
A fire protection owner considered selling to her operations manager but realised he couldn't fund most of the price upfront. She sold to a direct buyer instead, who kept the manager on in an expanded role.
An illustrative example, not a real client or transaction.
Questions owners ask
Which route gets the highest price?+
It depends. Competition can lift price, but a direct buyer who values certainty and a smooth handover may also pay well. Get advice on any offer.
Can I sell to staff and still get paid in full?+
Sometimes, if they can obtain finance. Otherwise part of the price is usually paid over time.
Where does Velaro fit?+
We're a direct buyer. There's no commission and no listing, and we'd encourage you to have your own advisers.
Important
This article is general information only. It doesn't take your personal circumstances into account and isn't financial, legal, tax, employment or valuation advice. Velaro Group is a buyer of businesses. It isn't a business broker, licensed financial adviser, registered tax agent or law firm, and it doesn't act for sellers. Please get advice from your own accountant, solicitor or financial adviser before making any decision. Read the full disclaimer.
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