Finding the right business broker when selling a business may help you receive the best possible price. If you don’t have the time to negotiate the business sale privately then a business broker may be the right choice for you. Business brokers are the experts in selling businesses, it is what they do every day. Similar to real estate agents, accountants, lawyers – they provide a service – which is to help you sell your business.
There are a number of roles a business broker performs during the business sale process. A business broker is trained to provide a valuation of your business by reviewing the businesses circumstances and comparing it to current market conditions. They will deal with buyer enquiries and if they find a ‘genuine’ enquiry will put you in contact and begin the process of due diligence – which is where the interested buyer reviews your business and if it is a viable purchase for them. The business broker will also work with the interested buyer during the sale and negotiate terms and conditions and help with the necessary paperwork.
A good business broker will be in contact with you regularly. Providing updates on the marketing strategy, if enquiries are coming through and what the next steps are. You should request a list of all the locations your business is advertised and do your research to make sure it is there.
When choosing a business broker, be sure to meet with at least 3 to compare. The ideal business broker should have experience selling businesses in your area, at least 3 years’ experience and a like-able personality. If you don’t feel comfortable with the business broker, you will have problems speaking your mind and making requests further down the track. Most business brokers charge between 8-10% commission for their services, sometimes with additional costs for marketing the business for sale. You should always try to get a referral for the business broker, ask if they have sold any businesses lately and if you can speak with the owner. We hear a lot of horror stories of brokers taking money upfront and sitting on a business for over a year with no enquiries. The idea of going with a broker is to sell your business, not to be stuck in the same situation 12 months later, minus what you paid upfront.
Remember, when choosing a business broker that you are paying for THEIR services, not the other way around. You are hiring them to market and sell your business, with the notion that they will get you the best possible price and save you time. If they are not fulfilling that service you need to question why, don’t always agree blindly with what is suggested. Always engage a ‘team’ when selling your business that includes an accountant, lawyer and any family members/business associates that you trust.