Owners looking to sell a business have two options. They can attempt to do this on their own or work with a professional business broker. Most owners choose the second route, as they lack the skills and experience needed to get the best price for their hard work.
However, each owner must find the right broker for their organization. This individual needs to get the best price for the business so the owner can move forward with life. When you contact a business broker to learn more about them and how they achieve this goal, ask the following questions. Using the same questions with each broker you contact makes it easy to compare answers and find the right person for the job.
Valuation Process
Learn how the broker completes a business valuation. If the broker provides a detailed answer, the owner can feel confident they know what they are doing. Brokers consider several factors when valuing the business, as the formula differs based on the type of business being sold.
Confidentiality
Business sales must remain confidential until the transaction is complete. If information leaks, key employees may depart the company and affect the sale. Competitors might use this opportunity to get an edge as well. The broker must explain the policies they have to keep the sale quiet.
Qualified Buyers
Professional business brokers maintain a database of prospective buyers. When choosing a broker, ensure they have qualified buyers in your industry or specialize in selling similar organizations. They use this database to get the business in front of those people most likely to purchase it.
Pricing
An accurate sale price attracts more buyers. Experienced brokers know how to determine this price while creating deal tension. Learn what methods the broker uses when determining this price and why they prefer those methods.
Experience
Brokers come in many types, and each person has their own strengths and weaknesses as well as experience. Many brokers used to own a business or currently do. This can be of help when selling an organization. However, the ability of the broker to land a deal needs to be of more concern.
Fees
Most brokers work on commission, but some in the field charge a retainer service. Other brokers offer a reduced fee for fewer services. However, brokers who charge higher commissions often work harder to command a higher selling price. Factor this into the decision regarding which broker to hire.
Familiarity with the Industry
Look for a broker who has sold similar businesses in the past. They have the connections and market access that those new to the industry lack. Furthermore, they know how to negotiate a good deal and who might be looking for the business that is going up for sale.
Listing Term
Most business brokers have a one-year listing term. However, that isn’t the case with all. Ask what the contract length is and under what conditions the contract may be terminated. Furthermore, learn the conditions of the listing before signing a contract with a broker.
Sale Preparation
Learn what steps the broker takes to prepare the business to be sold. Do they handle due diligence? Will they remain with the seller through every step of the process? A good broker guides the seller at each stage rather than showing up to close the deal.
Sales Contract
The broker should have an attorney to draw up the sales contract. This ensures the agreement is properly structured. Business owners need to know they are covered once the sale is complete, so they can move to the next stage of life.
Spend time speaking with several brokers before choosing who to hire. Although this takes time away from the business, it pays off in the end. You’ll have a successful sale at a price you appreciate and can enjoy the next thing you choose to tackle.
