As a Seller, Why Work With an IT Business Broker?

The decision to sell your IT business is never easy. When you’ve spent years building something from the ground up, you want to make sure that your business continues to thrive, even without your day-to-day involvement.

Whether you’re thinking of selling because you want to retire, change industries, or have access to more opportunities post-merger, you only get one chance to do it right. That’s why having a partner you can trust during this process is critical. 

Working with a business broker who specializes in your industry means relying on the expertise of someone who understands your business and can guide you to the best outcome, navigating all the nuances based on the experience of closing hundreds of successful deals in the past. 

The Host Broker has been connecting buyers and sellers in the IT services industry since 2005. We’ve successfully completed hundreds of transactions for hosting companies, MSPs, ISPs, data centers, IaaS and SaaS providers, IT security firms, systems integrators, and more. As a result, we have an unmatched expertise when it comes to selling or buying companies in the IT sector. The best part — our services are free for sellers, since it’s the buyers who pay our fee.

When you’re thinking of selling your IT company, you might wonder if trying to find a buyer on your own or calling up a generic M&A broker is a good idea. It’s not.

Here are the top 7 reasons why collaborating with an IT business broker will help you land better results for your business.

1. We only work with IT service companies

Unlike generic M&A brokers who advise on anything from grocery chains to gas stations, we specialize only in IT. That means we know the industry inside out.

We know what it’s like to build an IT business from scratch. In fact, our sister company eBridge Marketing offers a wide range of digital marketing services for IT companies worldwide.

We have up-to-date experience with new technologies and understand how they change the dynamics of the market. What’s more, our knowledge is cumulative and our industry insights get better with every complete deal. 

2. We are well-versed in valuations and industry jargon

More often than not, selling your business to a larger company comes with a lot of stress. M&A advisors and lawyers from the other side will try to overwhelm you with jargon during due diligence and pressure you into accepting a low-ball offer as a result. These are just the realities of business. 

Our experience allows us to quickly estimate fair valuations and help you negotiate deals that undervalue your business. And if you’re not sure what EBITDA, TTM, TEV, LOI, APA and SPA are — you don’t have to stress, we’ll walk you through the whole process step by step. 

3. We already have a large pool of global buyers

The business world is too large for any one company to keep track of. If you think that you can get the best price for your business by sending emails to a few local companies you like, think again. 

Expanding the pool of potential buyers and introducing more competition is one of the best ways to maximize the acquisition price.

At the Host Broker, we’ve been building up a marketplace of global buyers and sellers for nearly 20 years. Our buyers have the capital and the desire to acquire high-quality IT companies — it’s the ideal place for any seller to be. 

4. We know what questions to ask

Selling your business is not just about the price — it’s about finding the right home for your life’s work. Asking the right questions is key to finding the perfect buyer, making sure the deal goes through, and being confident in how your business will continue to operate in the future. 

Whether it’s general, financial, or operational questions, we know exactly what to ask to get the full picture you need to make a decision. 

5. We are aware of what can go wrong

All acquisitions are complex processes with hundreds of moving parts, which means that lots of things can go wrong at any given moment. 

That’s why working with a broker who can take all the necessary precautions can be so helpful. You don’t want to end up in a situation where a deal you’ve been working on for months falls apart because of something that wasn’t clarified in the beginning.

6. We are focused on the outcome, not the transaction

In facilitating acquisitions, and connecting buyers and sellers, we’ve been building a thriving marketplace of our own for nearly two decades. For us, reputation is everything. We don’t cut corners to make a quick buck and don’t try to cram as many transactions in every quarter as possible. 

We are focused on the outcome and are only satisfied when both the seller and the buyer are happy with their deal.

7. We are paid by the buyers and are free for the sellers

As an IT business broker, we are paid by the buyers and our services are free for the sellers. That means you can get all the advice, guidance, and help outlined above, and keep 100% of the proceeds from the sale as well. 

When you work with the Host Broker, you significantly expand your potential buyers’ market, improve the chances of getting a better price, decrease the likelihood of the deal blowing up, and get to sell your business to the buyer you really trust. 

Start exploring the opportunity of selling your business today by getting a free evaluation. Contact us or call us at 1-888-436-5262 if you have any questions or want to know what the process of selling your business might look like.

7 Reasons to Hire a Business Broker

An interesting new blog from one of our partners, HatchIt, which is a platform for aggregators, entrepreneurs, and investors acquiring online and tech companies. They’ll share with us the reasons why you should hire a business broker.

As a business owner and entrepreneur, you’ve likely poured your heart and soul into your company. So, when it comes time to sell, how can you ensure the best possible outcome? Hiring an experienced business broker is a great place to start. Here are 7 reasons why you should consider hiring a broker to help sell your business:

1. Accurate business valuation and financials.

Determining the value of your business requires both knowledge of valuation methodologies and an understanding of the landscape of buyers. A good broker will know how to properly normalize your income statement and how to apply a multiple-of-earnings assessment or alternative valuation methodology. Equally important, a broker will know whether your business is a candidate for a strategic acquisition, and how to price it accordingly. Finally, buyers prefer to purchase businesses represented by a professional because the financial information has been vetted by a third party.

2. Effective marketing.

An experienced broker will know how best to position your business to attract qualified buyers. Quality marketing materials, including a “teaser” summary and comprehensive overview of the business, will help attract the best buyer candidates and weed out unsuitable buyers. Brokers may also list your business for sale on their website as well as marketplace websites to target acquirers of businesses that fit your size and profile.

3. The right buyers at the table.

The universe of potential buyers for your business may be wide and diverse – from individual entrepreneurs, search funds, and fundless sponsors, to strategic acquirers, private equity firms, and aggregators. There are pros and cons to each. A good broker will have in place a robust buyer network, as well as resources to reach additional candidates, so the right parties are at the table. Additionally, a broker can help screen buyers to ensure they have the financial wherewithal to acquire your business, and the right skills to operate it.

4. Effective Negotiation.

Purchase price is just one component of an offer. Deal terms, too, significantly impact the attractiveness of a proposal. Is the buyer seeking seller financing or performance-based compensation? Are you required to stay on for a lengthy transition? A broker can help you navigate terms, make informed decisions, and communicate effectively with the parties involved. Additionally, business acquisition negotiations can be emotionally charged. An experienced broker will help the parties keep emotions to a minimum and stay focused on a mutually beneficial outcome.

5. An Outsourced, Efficient Process.

Running a sales process can be time-consuming and exhausting. In addition to preparation, the seller will need to manage multiple negotiations and respond to ongoing requests for information. Most business owners have their hands full just running their business. So, it makes sense to outsource much of the effort to a professional. A broker will help you avoid any business performance issues that might emerge if you are pulled in too many directions during the process.

6. Confidential Dialog.

A sales process requires disclosure of confidential information to multiple parties. Without the assistance of a broker, it can be difficult to confidentially engage with potential buyers. A broker can approach buyers, even competitors, with a “blind teaser,” followed by a non-disclosure agreement (NDA) before any information is exchanged. Likewise, a broker is less likely than a business owner to inadvertently alert employees or other stakeholders of the sale.

7. Documentation.

There are a number of legal documents involved in a business sale transaction, including an NDA, Letter of Intent (LOI), and Asset or Stock Purchase Agreement (APA or SPA). While it certainly makes sense to engage an attorney when developing documents, a broker can help defray legal costs with access to boilerplate templates, past agreements, and a working knowledge of the key terms and opportunities for negotiation. Leveraging the knowledge of a broker to help with these agreements, while engaging your attorney for document review and counsel on key deal points, can be an effective division of labor. Finally, a broker can assist in the transfer of assets at the conclusion of a successful sale.

We hope this information is useful as you consider your options for selling your business. We operate The Hatchit Marketplace, a platform for both for-sale-by-owner and brokered online and tech-related businesses with valuations ranging from $25k to over $20 million.

The Hatchit Marketplace,
LLCResearch Triangle, NC