If you feel the time has come to sell your business, hiring a business broker is your best chance of securing a beneficial, safe, and fair deal. The right business broker will handle all the transaction details and ensure to properly represent your best interests.
This article will be helpful to any business owner who is considering selling their company with the broker’s assistance.
Read on to discover the questions to ask your prospective business broker.
1. What is the Broker’s Past Experience?
The first thing to review before hiring a broker is checking their prior experience selling a business similar to yours.
Of course, your perfect broker’s portfolio doesn’t need to perfectly match your business. However, you’re off to a good start if the broker worked for companies with identical business models and target buyers.
Hiring a broker with no experience selling a business such as yours will waste valuable time better spent prospecting and negotiating.
2. How Many Businesses (Such as Yours) Does the Broker Sell Yearly?
Numbers vary depending on the city, industry, business size, etc., so it’s best to ask several brokerage businesses this question and calculate the average on your own.
Besides finding the broker that matches your industry, it is essential to ask if they have sold any businesses of your size. Selling a $1 million company and a $50 million one is entirely different, so if the business broker hasn’t sold a business similar in size to yours, keep searching until you find a brokerage with the right experience.
3. How Will the Broker Value Your Business?
Good brokers understand that evaluating a business is quite complex, and no single formula applies to every company. Thus, asking a business broker how they value a company is a good indicator of their experience.
Business valuation is a complex subject, so steer clear from hiring brokers that use a generic valuation formula. Instead, work with brokers who have the experience and take their time to conduct a thorough, accurate valuation.
4. How Will the Broker Manage Your Confidentiality?
During the process of selling a business, it’s crucial to maintain the confidentiality of all parties involved. You don’t want sensitive business information leaking, and nor does the potential buyer.
Besides, if word gets around about your impending sale, customers may think there’s a problem and stop buying from you, whereas employees may question their job stability and seek employment elsewhere.
Thus, when selling your business, it is important that you hire a business brokerage that has security protocols in place to protect your confidentiality.
5. What do Others Say About the Broker?
Research the experiences of your broker’s past clients to uncover what business owners such as you had to say. When searching for broker reviews, read through the reviews from company sellers and buyers to assure both sides were satisfied with the outcome.
Before officially hiring your business broker, ensure they have a considerable number of positive reviews.
6. How do the Broker’s Opinions and Values Align with Yours?
Of course, you need not be very good friends to do business successfully with someone. However, you are probably going to work closely with your broker for a vast period of time.
Moreover, the broker will represent your business among potential buyers, so it’s essential you choose someone who embodies your brand values.
Therefore, it is important to ensure you feel comfortable working, communicating, and sharing sensitive information with your broker.
7. What Else Can the Broker Offer to You?
Before committing to a brokerage, investigate what their services entail. For example, at Triad Securities, their trade service includes various other elements to help reduce friction in your trading activity.
Triad trade execution services offer extended electronic trading, multiple algorithmic suites, trading with multiple asset classes in the U.S. and internationally, and outsourced trading and back-office services.
8. When Does the Broker Expect to Close the Transaction?
According to BizBuySell research, nearly half of business owners surveyed believed the selling process would take less than five months. Yet, the 2018 Q4 IBBA MarketPulse report found that the average time to close the transaction of selling a business is over nine months.
Of course, there are numerous strategies brokers may use to speed up that timeline, but the length of the selling process depends on many other factors, such as your industry, company size, net worth, buying conditions, etc.
Even the most experienced brokers cannot affect all these conditions, but the best you can do is hire someone who is reliable, experienced, and transparent with you.