A quick search for business brokers on the Web will return millions of results, with everything from do-it-yourself guidebooks to independent law firms, and independent consultants to well-resourced firms. But which one’s right for your business? With a business considered an entrepreneur’s greatest asset, it’s not exactly a decision you should make flippantly. With that In mind, we’ve assembled what we consider a helpful guide for selecting the right business brokers to represent your company in a sale.
Business owners tend to hold company with other entrepreneurs, and it’s likely you’re connected with at least a few people who have worked with a broker. Often times business brokers will offer additional services around management consulting in addition to brokerage services, which may be a great angle to take when asking around, as in many cases, tipping off employees or competitors of a possible sale is less than ideal. If your local circle is small, consider inquiring about management consulting services within LinkedIn groups you may be a member of.
Check Their Track Record
Everyone’s experience is different, so before you pick up the phone, hop online and do some digging into their reviews, and if they publish the deals they’ve put together. You want to work with a broker who has experience in your industry, structure, and size. If you’re preparing a $40M business for sale and the brokers you’re reviewing have only dealt in deals under $1M, move along. Once you narrow the field to a few brokers, make contact and ask for references.
Ask These Questions
Now that you’re either on the phone with them or scheduling a consultation, there are a series of important questions you’ll want to ask before you make your final selection. We have broken these questions into two categories: about the broker, and about their operations.
About The Business Broker
As with any career, a professional will continue to grow and develop new skills beyond their entry point, however understanding the broker’s starting point and credentials should provide helpful insight into how prepared the broker is to represent clients well. There are several broker-related certifications and associations, both local and national. Learn their certification and standing of any associations they’re part of.
The next assessment is less about the answers provided, but rather the questions asked. You want a broker excited about your business; eager to learn more about it. You want to get the sense they are enthusiastic about promoting your listing, the creative juices are already flowing.
Learn About Their Operations
This is where you want some specifics. Loose answers are a “deal breaker for the deal maker”. Ask what their current personal listing workload looks like (sell-side), and what their max individual capacity is. You don’t want a broker who will take anything they can get, which means if you’re a new client or a squeaky wheel, you’ll get attention, otherwise it’s sit and wait—the same goes for promoting your business listing. A healthy brokerage firm will set limits per broker and have multiple agents able to balance out the workload.
A key component of your operations interview will include inquiring about their prospect screening process. With business ownership changes being what they are, discretion is critical. Does the broker have a signed NDA before divulging any business details (including business name) to a prospect? How will they discreetly market the business to prospective buyers?
Make a Commitment
With a few business broker interviews under your belt, now’s the time to make a selection and enter an agreement with one. In the case you have a tie between two firms, go with your gut—your instincts played a role in getting you to the point of a sellable business. Be sure to tie up loose ends when you make your decision, including signing an agreement with your selected business broker and informing other firms you’ve made your decision and they unfortunately were not selected. It’s good business, and you never know, if you’re buying a business down the road, you may be sitting across the table from a firm you did not choose during a sale!