Dual agency sales often get a bad rap. Business owners enter into a dual agency transaction, only to find out the agent is fighting for the other party’s interests. Or discover that their staff has been tipped off to the sale of the business, creating unrest. Or they won’t profit like they had been led to believe.
Unfortunately, these rogue agents have given the process a bad reputation.
A few bad apples shouldn’t spoil the bunch. Believe it or not, a dual agency sale can add a great deal of value to the sale of a business. From helping it move more quickly to leaving more money in the pockets of all involved, this approach actually helps streamline the process.
The most common concerns about a dual agency sale are:
- Conflict of Interest – By definition, buyers and sellers have conflicting interests. Can a dual agent serve the best interests of both?
- Confidentiality – When an agent is responsible for both parties, they know the most intimate details about each side of the transaction. Can an agent keep these details from the other party?
- Complexity – The sale of a business is much more complicated than selling a home, for example. How can the buyer and seller be sure all of the details are communicated properly?
- Cost – If an agent is working for both parties, they know the numbers each side is willing to work with. How can each party be sure they’re not leaving money on the table?
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Yet, in reality, the “pitfalls” of a dual agency sale are precisely the things that make it such a brilliant strategy. Below are 4 main reasons that figure into dual agency transactions being a smart business move:
- Collaboration– In a business transaction, the buyer and the seller must work together to come to a mutual agreement. A dual agent is tasked with the duty to be the mediator between the two parties, helping navigate the process. Because owners have worked tirelessly to build their business, they can become emotionally charged when selling it. Having an intermediary helps the process run more smoothly.
It’s the business owner’s decision and responsibility to determine how much the buyer pays or the seller accepts. A dual agent’s responsibility is to disclose the necessary information so that each party fully understands the facts of a deal. Then they can decide if they want to continue with the transaction. Neutrality is something a good dual agent can provide.
- Confidentiality– Most business owners don’t want their staff to know the business is for sale, therefore confidentiality is crucial. A dual agent not only has the obligation to maintain confidentiality, but to only present the opportunity to the businesses that meet the qualifications. From secure prospect screenings to releasing information in appropriate phases, a dual agent helps keep the transaction private.
- Clarification– With all that goes into selling a business, along with buying, it is helpful to have someone who has walked others through the process. From deal structures and legal issues, to deadlines and paperwork, having one agent to filter all of this through streamlines the transaction. Communication is critical to the success of a transaction, and having more than one agent to deal with means a higher probability that things will get lost- not only in translation but in the transaction itself. A dual agent can ensure that all documents, communications, and processes are handled properly and with integrity.
- Cost– Facilitating the purchase or sale of a business can take a lot of time, energy, and money. A good dual agent must have years of training and experience in buying and selling businesses, and be well connected with attorneys, finance professionals, accountants, and other professionals who may be needed during the process.
In the case of the seller, an agent helps determine the best price for the business, assembles the marketing package, and completes all the necessary work to prepare the business for its sale. The buyer can also benefit from the dual agent, by allowing the agent to present them with motivated sellers whose businesses meet the buyer’s requirements. Dual agents provide guidance and advice that can save both buyer and seller precious time and money.
The dual agency transaction debate may never be fully resolved. However, when done right, it both simplifies and speeds up business transactions. A dual agent’s job is simply to bring buyers and sellers together. When performed with integrity and professionalism, a dual agency transaction saves both parties a lot of time, money, and frustration.
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