If you’re getting ready to sell your business, an experienced business broker is one of the most important assets you can add to your team. The right broker will help you value your business, avoid pitfalls and costly mistakes, and find buyers who are ready to make a deal. Here’s what to look for in a business broker to find the right fit for you.
Experience
Finding a broker who has experience means you’ll get the benefit of all the listings and closings they’ve done over the years. Choose a broker who considers it their full-time career, one who puts all their energy into finding the right business to sell and the right buyer for the business. Look for someone who has experience dealing with all kinds of buyers, from private equity firms to first-time investors. Your broker should have the skill, patience, and knowledge to know how to manage people and keep them engaged until you can close the deal.
Ask about credentials and success rates. Look for a broker who is deliberate about the listings they take on; good brokers only list companies they think have the experience and resources to sell at top value. They prefer a smaller number of quality listings so they can give them the attention they deserve.
I also recommend that you look for a specialist, someone who only deals with an industry they know well. Brokers who specialize in just one industry understand your company’s business model. They speak your language. They’ll give you solid advice on what you need to do to improve your company’s value in the market. They won’t need to take up valuable time learning about the industry or how you make money. They’ll know what questions to ask and what kinds of pitfalls you might encounter during the sale process.
Their network of support professionals, such as insurance agents, accountants, and lenders, will also understand your business. And their database of potential buyers will all be focused on your industry, meaning you won’t be wasting time with prospects who are not sure what they want.
Professional and efficient business processes
Before you agree to work with a broker, ask about their processes. Do they have support staff who provide assistance in administration, marketing, and prospecting? Your broker should be responsive, returning your calls and answering questions. But I always say that if your broker picks up the phone every time you call, they are spending his time on the wrong activities. Look for someone who has associate help so they can focus on what’s most important right now.
Make sure your broker has processes in place to keep your data confidential and secure. My firm uses encrypted file transfer technology to make sure our clients’ financial records aren’t at risk.
You shouldn’t have to pay any money upfront to a broker. Providing a broker’s opinion of value is a service that’s part of the discovery process and their investment in your company’s listing. Reputable brokers make their money based on results – they get paid when the business sells.
Ask about your broker’s process for qualifying buyers. It’s their job to make sure the prospective buyers you meet are screened, eligible for funding, and ready to make a deal. Your broker should prevent you from wasting time and energy on buyers who aren’t the right fit for your business.
A personality you can work with
Trust is the most important factor in any business deal, and you need to be able to have confidence in your broker and how they do business. Look for someone who communicates well and often, someone who listens to your needs and concerns. Trust your gut; if you’re not comfortable with this person in the first meeting, you’ll be miserable by the end of the sale process, which can take many months.
A good broker will ask tough questions. That’s a good sign; you want to make sure they understand your business, your goals, and your issues before they take you on as a client. Be wary if you’re pressured to give them the listing after just a brief meeting. They don’t have all the information they need to make an informed decision about fit– and neither do you.
Surveys from business owners and brokers indicate that only about 10-20% of companies listed for sale actually close the deal. The odds that your business will sell when you’re ready to sell increase dramatically when you find the right broker to help you through the process.
About the author: Jim Parker
Jim Parker is an experienced business broker specializing in lawn and landscape businesses. The Lawn Boss is based in Clermont, Florida. As an industry leader he has served as the past president of the Business Brokers of Florida. Jim is a sought-after speaker, where he teaches others in his industry best practices in ethics, closing transactions, and finding qualified buyers. He consistently is a million-dollar award winner and is among the top 50 in sales of all business brokers.
He is a Certified Business Intermediary (CBI) and is a Mergers & Acquisitions Master Intermediary (M&AMI). To contact Jim, visit thelawnboss.com or call (407) 927-8999.