Business owners are often surprised to find out just how involved the sales process is. Asking the right questions will help you find an experienced broker who has your best interest in mind. Keep reading to find the top 5 questions to ask when hiring a business broker.
1. Have you had a successful sale with a business like mine?
The right broker has successfully sold businesses that are similar to yours, in terms of operation, size, and scalability. When meeting with potential brokers, it’s more important to focus on the types of businesses they’ve worked with, rather than the specific industries. The sale of a small business is much different than that of a large corporation. If you’re a mom-and-pop store and they’re used to handling multimillion-dollar operations, you two may not be the best fit. Some brokers have experience in handling different types of businesses, so it’s worth inquiring about.
2. What marketing materials and strategies will you execute while keeping my sale confidential?
Discretion is essential throughout any business transaction. Any good broker should be able to maintain your business’ confidentiality while targeting qualified buyers. They should also be able to offer customized marketing plans to fit the unique needs of a seller. The sale of your business is contingent on getting in front of the right audience. Find a business broker who has demonstrated the ability to develop a plan that best makes sense for you.
3. How many years of experience do you have in this industry?
Navigating through a successful sale requires a level of expertise. When researching potential brokers, you’ll want to consider how long they’ve been in business, what their qualifications are, and if they have any business brokerage certifications. You’ll also want to take note of the reputation they have in their industry. An online search can tell you a lot about the quality of a business. But, it’s also good if you can speak to colleagues or others who may have dealt with a broker hands-on. If that’s not a possibility, ask the selling firm for testimonials.
4. How will you determine the value of my business?
The business valuation process is one of the most delicate aspects of a sales transaction. You’ll want to hire a business broker who’s valuation process analyzes all aspects of your organization, from cash flow to goodwill. Your goal may be to make as much money as possible but keep in mind you can’t trust every broker who promises an outlandish sale price. Remember that at the end of the day, your business is only worth what others are willing to pay for it. 70% of businesses are considered nonsaleable, and a large factor in that is realistic expectations from sellers. It does no good to throw a business on a listing board with an impetuous listing price.
5. Do you have a network of qualified buyers?
The goal of any business broker is to match sellers with the right buyers. Ideally, they already have a network of interested candidates who match the qualifications you’re looking for. But, if not, then you at least want to know that your broker can target the right people. Once they’ve generated buyer inquiries, it’s their job to help facilitate a screening process.
Source: Sunbelt Network
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Edwin Mysogland, CVA, CEPA, CMEA
Managing Partner, Indiana Business Advisors