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Frequently Asked Questions

Question 1: How do I choose the right business broker to sell my company in Singapore?
 

Ans: Choosing the right business broker in Singapore is one of the most critical steps. Look for experience, track record and communication style.

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  • Experience & Market Understanding: Ask them about their experience. Inquire about their approach to market analysis, buyer qualification, and how they ensure a confidential sale. Ask them how they typically run their deal.

  • Proven Track Record: Ask for verifiable past sales track record, not just listings. Keep in mind that different deal size attract different type of business brokers in Singapore. A business worth SGD $5 mil will not appeal to M&A advisor that focus on mid-market deals, which are typically in the range of $50 mil to $200 mil.

  • Communication Style: Ensure their communication is clear, consistent, and that you are comfortable with their level of support and availability.

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Question 2: How do I verify if a Singapore business broker is licensed and trustworthy?
 

Ans: Unlike property agents, there is no single mandated licensing body for business broker in Singapore, unlike Australia and New Zealand. However, you should look for signs of trustworthiness and professionalism:
 

  • Company Registration: Verify the brokerage firm's registration status with the Accounting and Corporate Regulatory Authority (ACRA) through their BizFile+ portal.

  • References & Reputation: Ask the broker for client testimonials or references from past successful sales. Do your own online research on their reputation.

  • Professional Affiliations: Check if they are members of reputable industry associations.

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Question 3: How much commission do business brokers typically charge in Singapore?

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Ans: Broker commissions are generally negotiable and can be structured as a Success Fee, Milestone Delivery Fee and Upfront Fee (Retainer). While rates can vary widely from 3% to 15%, based on the complexity and size of the transaction.

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For small to mid-sized enterprises, the total commission can range, but the key is that it's tied to the successful closure of the deal. At Fey Day, our fees are typically 4% to 10% of the total selling price.​

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Question 4: What services are included when I hire a business brokerage firm?

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Ans: A full-service business brokerage firm or M&A advisory firm typically provides an end-to-end service, including:

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  • Business Valuation: Providing an objective opinion of value and advising on a competitive listing price.

  • Preparation: Compiling essential financial and operational documents into a professional buyer information package (often a Confidential Information Memorandum or CIM).

  • Confidential Marketing: Discreetly marketing your business to their network of pre-qualified buyers and on targeted platforms.

  • Buyer Vetting: Screening potential buyers based on their financial capacity and relevant experience, only releasing sensitive information after an NDA is signed.

  • Negotiation Management: Filtering offers, managing the negotiation process, and structuring the deal terms.

  • Due Diligence & Closing: Facilitating the buyer's due diligence, assisting with the Sale & Purchase Agreement (SPA), and managing the closing and handover.

 

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Question 5: What is the process for selling a business through a business broker in Singapore?

 

Ans: The typical process involves:

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  1. Preparation & Valuation: Evaluate the business on its current suitability for sale, determine the business value, and get all documents in order.

  2. Engagement: Sign an engagement agreement with your chosen business broker.

  3. Confidential Marketing: The broker market the business to potential buyers.

  4. Buyer Qualification & NDA: Buyers sign a Non-Disclosure Agreement (NDA) before receiving the detailed information package.

  5. Buyer & Seller Meeting: The broker facilitates the meeting between buyer and seller.

  6. Offers & Negotiation: The broker presents and negotiates offers to reach a mutually acceptable price and terms.

  7. Due Diligence: The buyer verifies all claims and documents in a secure data room.

  8. Legal Closure: A Sale & Purchase Agreement (SPA) is drafted, reviewed by legal counsel, and signed.

  9. Handover: The transfer of ownership, assets, licenses, and operations is completed.

 

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Question 6: How long does it usually take for a business broker to sell a business?

 

Ans: While individual sales vary greatly, the timeline typically range from 7 months to 20 months. Factors influencing the duration include:

  • Preparation: Businesses with clean, verifiable financial records sell faster.

  • Valuation & Pricing: A realistically priced business attracts serious buyers quickly.

  • Industry & Market Demand: High-growth or niche industries may close faster.

  • Complexity: Larger or more complex deals with many assets, contracts, or legal issues take longer for due diligence.

 

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Question 7: How do I determine the value of my business before selling?

 

Ans: Determining a competitive and fair price requires professional advice, but common valuation methods used in Singapore include:

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  • Market Approach (e.g., Comparable Sales/Transactions): Compares your business to recent sales of similar companies in your industry, using financial multiples (e.g., Price-to-Earnings, EV/EBITDA). This method is commonly used by micro businesses and SMEs.

  • Asset-Based Approach (e.g., Adjusted Net Asset Value): Calculates the fair market value of all assets minus liabilities. More common for asset-heavy or distressed businesses.

  • Earnings-Based Valuation (e.g., Seller's Discretionary Earnings - SDE): Often used for micro businesses, this multiples your normalized annual earnings by an industry-standard factor.

  • Income Approach (e.g., Discounted Cash Flow - DCF): Focuses on the present value of the business's projected future cash flows. Best for businesses with stable, predictable earnings.

 

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Question 8: Can a Singapore business broker help me value my business accurately?

 

Ans: Yes, a competent business broker will provide an Opinion of Value or conduct a preliminary valuation based on their market expertise and comparable sales data. For complex or high-value transactions, or if a buyer requires a legally defensible valuation, the broker may recommend a professional, accredited Business Valuer.

 

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Question 9: What financial documents should I prepare to sell my business?


Ans: A buyer will require a comprehensive financial history for due diligence. You should prepare at least the last 3 years of:

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  • Profit & Loss (P&L) Statements / Income Statements

  • Balance Sheets

  • Cash Flow Statements

  • Detailed list of Assets and Equipment

  • Schedules of Accounts Receivable and Accounts Payable

  • Information on any outstanding Debts or Loans

  • Lease Document

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Question 10: Can a business broker help me find buyers confidentially?


Ans: Absolutely. Maintaining confidentiality is one of the broker's most critical functions. They will:

  • Anonymously Market: Create a listing that describes the business without revealing its name, exact location, or sensitive details.

  • Pre-Screen Buyers: Only present the opportunity to pre-qualified buyers

  • Enforce NDAs: Require all serious prospects to sign a robust Non-Disclosure Agreement (NDA) before releasing the detailed information.

 

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Question 11: How do I negotiate the selling price of my business with potential buyers?

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Ans: Effective negotiation is a balance of price, terms, and risk. Your broker will be instrumental by:

  • Managing Communication: Acting as an intermediary to remove emotion and keep negotiations professional.

  • Structuring the Deal: Going beyond just the price to negotiate favourable terms, such as payment structure (e.g., upfront cash vs. earn-outs), and post-sale involvement (e.g., consulting agreement).

  • Defending Your Value: Backing up your asking price with data, projections, and a clear understanding of your business's competitive advantages.

  • Project Management: Corresponding with multiple buyers to ensure proper timeline and competitive offers.

 

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Question 12: What documents do I need to prepare before hiring a business broker?

 

Ans: Before formal engagement, you should have the following prepared or easily accessible:
 

  • At least 3 years of Complete Financial Statements (P&L, Balance Sheet, Cash Flow).

  • Corporate Documents (ACRA business profile, incorporation documents).

  • Key Operational Contracts (Lease agreements, major customer/supplier contracts).

  • List of Tangible Assets (Equipment, inventory, etc.)

  • Organization Chart and staff contracts.

  • Last 24 months of Management Accounts

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