Selling your business without a broker: what changes and what doesn't
Dealing directly with a buyer can be quieter and simpler. Here is what you gain, what you give up and how to still protect yourself.
By Many small businesses are sold through a broker, and a good broker earns their fee. But plenty of owners would rather not list publicly, pay a large commission or spend months answering questions from people who were never going to buy. If a genuine buyer approaches you directly, it is worth understanding what a direct sale actually involves.
What a broker usually does
A broker prepares the business for market, estimates a price range, writes an information memorandum, advertises the business, screens enquiries, manages confidentiality agreements and helps negotiate. Their fee is commonly a percentage of the sale price, sometimes with a minimum fee or upfront marketing costs.
That work has real value, especially when you want to test the market with many buyers. The question is whether you need all of it, or whether you already have a serious buyer in front of you.
What changes when you deal directly
There is no public listing, so competitors, staff and customers are far less likely to hear about it. You speak to the decision-maker from the first call instead of through an intermediary.
You also avoid a success fee on the sale price, although you will still pay your own accountant and solicitor.
The trade-off is that you are not running a competitive process. You are dealing with one buyer, so you need your own advisers to tell you whether the price and terms are fair.
What doesn't change
You still need clean records, a clear picture of what you actually do each week and an honest view of the risks a buyer will see. You still need a solicitor to review the contract and an accountant to check the tax outcome.
A direct sale is not a shortcut around good advice.
You can also use a broker or adviser on an hourly or fixed-fee basis to review an offer, without listing the business. Some owners find that a sensible middle path.
How to protect yourself in a direct sale
Verify who the buyer is using contact details you find yourself. Ask how they intend to fund the purchase and what evidence they can give as things progress.
Share information in stages, starting with summaries rather than customer names.
Ask for any proposal in writing, broken into what is paid at completion, what is paid later and what depends on future performance. Take it to your accountant before you respond.
Where Velaro fits
I'm a buyer, not a broker. I don't charge owners anything and I don't list businesses.
If you talk to me, you are talking to the person who would own and run your business afterwards.
That also means I can't be your adviser. I'd rather you had a good accountant and solicitor in your corner from early on, because a deal that you understand properly is a deal that holds together.
Your checklist
What to do next
- Decide whether you want a competitive process or a quiet one
- Verify the buyer independently
- Ask how the purchase would be funded
- Share information in stages
- Get any proposal in writing, split into its parts
- Have your accountant and solicitor review before you agree
Example
A pest control owner in Logan does not want his competitors to know he is thinking about retiring. Rather than listing, he talks to two buyers who approached him directly and pays his accountant to review both proposals. He chooses the one with more certainty at completion, even though the headline price is slightly lower.
An illustrative example, not a real client or transaction.
Questions owners ask
Is it legal to sell my business without a broker?+
Yes. There is no requirement to use a broker. You should still use a solicitor for the contract and an accountant for tax.
Will I get a lower price without a broker?+
Not necessarily. A broker can create competition, but a direct buyer may value a quiet process and a smooth handover. Get independent advice on any offer.
Can I talk to a direct buyer while my business is listed?+
Check your agency agreement first. Many include an exclusive period and clauses about buyers introduced during the listing.
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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