“Are you interested in my business?”
This sounds a lot like you’re hocking your business on a street corner, but believe it or not, this question is often overlooked when business owners interview business brokers in order to list their businesses for sale. Does it seem a little obvious to you? I hope so; however when one’s thrust into the world of selling their business, it can be hard to see the forest through the trees.
A quality business broker will take the time to get to know the business intimately, from the obvious items like cash flow, balance sheet, and assets, to operations, employee stability and skill, vendors, and the strength of customer list.
But not all business brokers are interested in selling your business—they’re interested in the commission. So, how should a business owner select the right broker to represent their business?
1. “What do you need to know about my business to represent it?”
If the broker doesn’t respond with a laundry list or implied with a more or less tongue-in-cheek response of “everything”, a red flag should go up on whether or not the broker would be able to adequately value your business or source viable buyers.
A successful transaction begins with a thorough understanding of more than the books, but also the business’ inner workings. Is the existing team self-sufficient and are successful with a hands-off investor-owner or do they require a strong managerial leadership from a highly-present owner? Are any customer or vendor contracts coming up on expiration which need to be negotiated to maintain the same profitability?
2. “What is your experience representing businesses in my industry?”
The broker should have either industry or transferrable experience to be taking lead in the sale of your business for the same reason we don’t have oral surgeons performing bypass surgeries. Both are highly skilled doctors, however the tools and techniques are vastly different. While it’s great to give someone a shot, do you really want their first stab at it to be with your nest egg without experienced oversight?
3. “How many businesses for sale are you representing currently?”
This is less a question of ability and more one of time. Are you one of 20 or one of 5 he’s actively promoting and negotiating at the moment? Will you be leaving a message every time you pick up the phone to check in? Your business broker’s availability really comes into play as prospective buyers begin responding to marketing. You want to know for certain your business’ representative will be on their “A” game when the time comes to schedule deal meetings.
4. “What’s the average size business for sale you represent?”
Not necessarily a disqualifier, but certainly worth noting if you have a $5 million dollar business and her bread-and-butter deal is north of $15 million. You may not be as high priority to the broker as her other clients.
Flipping the script, if your business is valued at 4-5 times the average deal your independent business broker handles, is your deal out of her league? The response you should be after should this occur is learning about the additional resources and colleagues available to aid in marketing your business and structuring the deal. Having the rolodexes of a few more brokers is helpful when you’re looking for a bigger prospect pool than a single broker can provide.
At the end of the day, it’s experience that will sell your business. At Sun Acquisitions, our team of experienced business brokers have successfully represented business sellers and buyers in a range of industries and are eager to help you sell your business. Schedule your free consultation with one of our busines