The Role and Contribution of a Singapore Business Broker

The Unsung Hero!

In the past year, I have met many individuals who have not come across a business broker in Singapore before. Strange, isn’t it? Rightly so, since this is a niche field and people who do related work tend to call themselves a M&A advisor. It’s a fancier term, no difference from how a Singaporean term cooked chicken feet as “Phoenix Claw”. Hwahwahwa..

Most people who does business brokerage tends to do it on a part time basis, given the complex and long sales cycle. They generally come from business support industry that deals directly with micro and SMEs business owners. E.g. accounting, loan brokerage, commercial lawyer, real estate (for retail, commercial or industrial), corporate secretarial, etc. There are people who perceive business brokerage as largely match-making. Is that really so? That would be akin to calling a doctor, a pharmacist.

A Business Broker in Singapore typically does the following:

• Network to cultivate both buyers and sellers pool

• Evaluate the business for sale to determine it’s sellability

• Determine the business valuation

• Proceed with the marketing of the subject business

• Ascertain the buyers’ suitability for specific projects

• Facilitating the meetings between buyers and sellers

• Project manage the due diligence process

• Rope in 3rd party professionals for due diligence and contractual agreement

• Negotiate the price and deal structure

• Ensure both buyers and sellers fulfil their respective obligations post-sale

Given the lengthy process, highly nuance and multi facet nature of a business brokerage role, it’s deemed to be an incredibly challenging and complex role by most people. I don’t disagree, thankfully I find the whole process to be largely enjoyable.

Business Brokerage is a multi facet role!

So what are the contributions or benefits made by a Singapore Business Broker?

1. Reduce Unemployment Rate in Singapore

Most SMEs business owners wanted to exit from their business due to retirement. When SMEs business owners are unable to find suitable parties to take over their businesses, they will inevitably shut down their business and retrench their existing staff.

There has been an ongoing trend in Singapore for years as most of the mainstream SMEs business owners are Baby Boomers and Gen X. Such cases are similar in Japan and USA. This is a related article from The New York Times.

By finding suitable parties to take over the business, we can effectively prevent retrenchment when the owners retire.

2. Employment Opportunities For Retrenched Employees

Many capable senior executives in Singapore-based MNCs have been affected by a series of layoffs in the past 3 years. e.g. Carousell, Ninja Van, Yahoo, Yeo Hiap Seng, Dyson, Cannon, Citibank, Doctor Anywhere, One Championship, etc 

During their job search, they faced extensive challenges due to age-based discrimination and former high salary/ position. More often than not, they will end up being under-employed or unemployed for an extended period.

By taking over businesses that are already successful for years if not decades, they gain meaningful employment for themselves while continuing the legacy of the original founder. It's a win-win for the original business owner and unemployed senior executives.

Read Next Article: 6 Reasons Why People Buy Business in Singapore

3. Promote Entrepreneurship in Singapore

For many SMEs that shut down due to succession issues, they tend to be replaced by SMEs that are from overseas. Do you think these foreign SMEs are likely to have such headcounts in Singapore? Unlikely... In part, due to our high cost of operation and small market in Singapore. There are more and more jobs being offshored to countries such as the Philippines, Malaysia, India and Thailand. Their labour cost is typically 1/3 to 1/5 of our Singapore based employees. Check out the salary comparison chart done up by Numbeo.

By ensuring the continuity of successful SMEs in Singapore, we are directly supporting the survival of other SMEs since we are all part of the same ecosystem

4. Legitimate Wealth Transfer

Most SMEs in Singapore are self-funded (bootstrapped) and they represent a significant amount of the owners' wealth. If the business owners are unable to successfully exit from their business, their earlier struggles for the past 2 to 3 decades would come to naught. Many SMEs owners come from modest backgrounds, and this is likely to impact their retirement plan.

Are you trying to sell a business in Singapore?

For most business owners, selling a business in Singapore is an uphill task. Singapore is a small market for most businesses, and this directly impact the number of international businesses or investors who are entering into our market.

For individual or business looking to buy a business in Singapore, this post a challenge for future growth opportunity. (Noth withstanding the high cost of operation here) For buyers and sellers, they will have contend with an opaque and illiquid market. This means there is limited access to information.

In an ideal world to achieve the best outcome for both buyers and sellers: liquidity, information and choices are paramount. Yet all of these are missing in Singapore market.

As such, it is in the best interest for individuals looking to sell a business in Singapore to utilise Singapore business brokers. They will have a wide network of buyers, experience & professional objectivity that will reduce the time and stress of selling a business in Singapore. This can be a major advantage to business owners who have limited experience in sell buy business transactions.

Read Next Article: Pros and Cons of Buying a Business in Singapore - A Guide for Aspiring Entrepreneurs

Whether you are looking to buy business in Singapore or sell business in Singapore, let us help you. Talk to a business broker in Singapore today.