By Curtis Kroeker in The Business Journals | November 4th, 2013
When selling your business, you have the option to either sell it yourself or hire a business broker. Though selling your business is possible, hiring a broker will often ensure a smooth sale and transition from ownership.
“Unlike many small business owners, brokers have years of experience in selling small businesses. They know what works and what doesn’t, making them extremely helpful when handling tasks such as business valuation, advertising or marketing, prospect interviews, negotiation, due diligence, and other critical aspects of the sale.”
Enlisting in the services of a broker will also allow you to focus on day-to-day business operations rather than spending countless hours on the complex details of the transaction.
A quality broker can be the difference between a successful business exit and a long and costly sale. Here are six key areas of hiring a broker you should consider as you progress in your business sale.
For the full list, click here: 6 issues to consider before hiring a business broker
1. Certifications Aren’t everything
Not every state regulates business brokers, so more certifications doesn’t mean they’re more qualified.
“Often times, brokers voluntarily join certain associations that are committed to upholding ethical standards of conduct and professionalism, such as the IBBA (International Business Broker Association), a state brokerage association, or other types of trade organizations. Also be on the look out for brokers accredited as a CBI or Certified Business Intermediary, which requires brokers to successfully complete an extensive training program on certain aspects of business for sale transactions that can further benefit you.”
2. Relevant Selling History
“Find out how many businesses in your market and industry your broker has sold in the last 12 and 24 months, and compare that number across the multiple brokers you’re considering. If you see he’s on a cold streak, take caution, as it could mean that area isn’t his specialty.”
3. How Do They Prepare For a Sale?
“The best brokers can make the process of getting your small business ready for sale a lot smoother. Ideally, your broker should walk you through a step-by-step preparation process to remove any potential hurdles, while also ensuring the value of your business is maximized.”
4. The Valuation Method
“Make sure to ask your broker to explain how he arrived at that value, as well as to see the sold business comps that the broker is using to establish an appropriate listing price for your business. Experienced brokers know valuing your business too low just to get a deal done faster will cost more down the road. However, you must also make sure not to price your business too high, as that can risk drawing the selling process on for years.”
5. Marketing & Prospect Identification Plan
“A good broker will start with compiling materials that will be handed out to serious prospects, and he will continue with efforts that specifically target individuals who have the ability and desire to purchase a business like yours. It’s also important to discuss the confidentiality of your business sale with your broker. Sometimes it’s necessary to keep the sale private to prevent competitors and employees from discovering the sale.”
6. Are You Comfortable With Your Broker?
“A good broker is one you’re able to trust and feel comfortable speaking with on a regular basis.”
The right broker will be invaluable in a successful business transaction. I suggest speaking with at least 3 brokers to ensure you find a good fit for you and your business. “Taking the time and effort to find the right broker will all pay off in the end – leaving you with a sold business at a great price.”
Read the full article here: 6 issues to consider before hiring a business broker