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.
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.
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.
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.