Daily Archives: August 16, 2016

Business Brokers in Los Angeles - Important Terms and Conditions to Consider in a Listing Agreement

Working with a business broker in Los Angeles will not only save you time and money but also protect you from the ill-minded buyers. The broker has been selling businesses for years and he understands the secrets of advertising to the right buyers and closing the deal fast and at the best price. Even so, before you pick a business broker to work with, it is imperative that you pay attention to the terms and conditions.

The exclusive listing agreement is the most widely used contract by business brokers in LA. This is an agreement that states that you can only use the broker you hire and regardless of how you end up finding a buyer, you will still pay the broker a commission. There are two other types of agreements available; open listing and exclusive agency listing. Regardless of the type of agreement you end up using, there are four important terms and conditions you need to consider.

Length of the listing
Most contracts will require you to commit with a business broker in LA for at least a year. However, this is not mandatory. You can negotiate the terms. You can try a 3 months or 6 months contract. This is more so if you are not comfortable with the broker you are working with. However, if you have full confidence in him, you can sign a contract of even more than one year. Although selling may not take that long, it will give the broker adequate time to find the right buyer for your company.

Contract cancellation
There is no guarantee that you will love how the LA business broker works months down the line. The worst thing that can happen is for you not to have a way to exit the contract. Before signing a contract with a broker, make sure you discuss the cancellation rights with him. Some brokerage firms will allow you to cancel any time while others will have penalties. By getting the cancellation rights, the business broker is giving you a way to opt out of the signed contract if you are unsatisfied.

Contract expiration
What happens when the contract expires and you still haven’t sold your business? The contract will expire when the agreed time has been reached. The two parties can choose to renew the contract if they are happy with each other or part ways. Even so, the broker should provide you with the list of prospective buyers he acquired during the duration of the contract. You need to remember that with the exclusive listing, if you close the sale prior to the expiration of the contract, you will have to pay the agreed commission.

Brokers compensation
Last but not least, the contract should give details on compensation. Compensation is done per hour, through a retainer or a commission once the business sells. The commission is the most common option.

Never sign a contract you do not understand. You must also never be afraid to negotiate for better terms. Lastly, only sign a contract with a business broker in Los Angeles that you have confidence in.

Types of Business Listing Agreements for Selling your San Diego Business

3 Types of Listing Agreements You Will Sign with a Business Broker

Selling your company is a huge decision and the process is often overwhelming for persons unfamiliar with the market. Your first step in selling a business should therefore be hiring a business broker in San Diego. A simple Google search will send you to websites of promising brokers. However, regardless of how experienced the brokers you are considering are, you have to note that some of them will entrap you with unfavorable terms in their agreements. But how do you know which broker to work with and which agreement to get into? The purpose of this post is to help you understand the different agreements you will come across.

The Listing Contract

When working with a San Diego business broker, you will be getting into a listing contract. This is the legal agreement between the two of you where the broker accepts to sell the business for you based on the specific terms outlined. The broker does most of the work including advertising and qualifying buyers.

There are several ways that business brokers in San Diego advertise your business. Some strategies are more effective than others. Therefore, before signing the contract, make sure that you fully understand how the broker plans on selling your business. There are three types of contracts used by business brokers.

Exclusive listing
This is the most common type of agreement you will get when working with a business broker. The agreement states that the broker is the only person that is allowed to promote your business for sale. The broker will then receive a full commission once the business has been sold. With this contract, the broker will still get a commission regardless of whether or not he is the one that brought the buyer.

It is obvious that once you get into an exclusive contract, you agree not to work with other San Diego brokers. It is, hence, important to make sure that you only pick the best broker that has a proven track record of selling businesses. Once you hire him, he will be the sole advocate of your business.

Open listing
With this agreement, you can use a business broker or sell the business on your own. This means if you bring in your own buyer and he buys your business, you don’t have to pay the broker a commission as is the case with exclusive listing. Additionally, if you choose to use more than one broker, commission will only be paid to the one that brings in the buyer.

Most business brokers in San Diego will not agree to this contract. They want to ensure they get the commission for their investments in your business sale.

Exclusive Agency Listing
With this agreement, you can sell on your own and not pay commission to the broker. However, you can only work with a single business broker who advertises your business. The broker only gets a commission if he brings in a buyer.

Before signing any contract, ensure you understand all the terms and conditions. You also need to make sure that you are working with the most competent business brokers in San Diego.