Listed with a broker and it didn't sell? What to check before your next step
An expired listing is common and it isn't the end of the road. Check your old agreement, learn from the feedback and decide what you want next.
By Many businesses are listed and do not sell. The price might have been set too high, the right buyer may not have seen it, or the business may have depended too heavily on the owner. It can be deflating, especially after months of inspections and questions. Before you try again, it is worth pausing to check a few things.
Read your old agency agreement again
Look for the length of any exclusive period and whether it has actually ended. Look for any clause that entitles the agent to commission if you later sell to a buyer they introduced, even after the listing ends.
These clauses are common and are often limited to a set period.
If you are unsure, ask your solicitor to read it. It is a short job and it protects you and any future buyer from an awkward dispute.
Ask for the feedback, and listen to it
Ask the broker what buyers said. Was the price the main objection?
Did people worry that the business depended on you? Were the accounts hard to follow?
Buyers often say things to a broker they would never say to an owner.
Write the objections down. Some you can fix, like tidying records or documenting how jobs are scheduled.
Some you may choose to accept, like a lower price for a quicker exit.
Separate the price from the structure
Sometimes a business does not sell because the asking price assumes a buyer will pay everything in cash on day one. A different structure, such as part of the price paid over time or a longer handover, can sometimes bridge the gap.
Done well, structure like this can get an owner closer to the result they want, with clear terms their advisers have reviewed. It is well worth exploring before deciding a business is unsellable.
Decide what you want from round two
You might relist with a different broker, try a quieter direct approach, or keep running the business for another year while you fix what buyers pointed out. There is no wrong answer, but deciding on purpose feels better than drifting.
If a direct buyer approaches you, tell them upfront that the business was previously listed. A good buyer will respect that and will want the old agreement checked just as much as you do.
Your checklist
What to do next
- Find your old agency agreement
- Confirm the exclusive period has ended
- Check for any clause about introduced buyers
- Ask the broker for written buyer feedback
- List the objections you can fix
- Decide between relisting, a direct sale or waiting
Example
A car wash owner's listing expired after nine months. Feedback showed buyers were worried about the lease term. She negotiated a lease extension with her landlord, which took four months, and a later buyer found the business far easier to finance.
An illustrative example, not a real client or transaction.
Questions owners ask
Can my old broker still claim commission?+
Possibly, if your agreement has a clause covering buyers they introduced and you sell to one of them within the stated period. A solicitor can confirm your position.
Should I drop the price?+
Maybe, but first check whether the real problem was the price, the structure or the information. Sometimes fixing the information does more than a price cut.
Will a buyer think less of my business because it didn't sell?+
A sensible buyer knows many good businesses do not sell the first time. Being upfront about it builds trust.
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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