Considerations when choosing a Business Broker (how should I select)
Business Brokers are looking for ‘qualified sellers’- those whose business is in good order, financially sound, and in demand by prospective buyers. At the same time potential sellers should also look to ‘qualify’ business brokers or agents. Here are a couple suggestions on how to qualify a business broker/ agent.
1. Do you know the broker from someone else who has gone through the sales process?
Referrals are a good way of knowing how a broker works once they are engaged. Find out what worked with a previous seller and what did not work. Can a brokers past limitations be addressed for your business sale process?
Also valuable in the referral process can be your lawyer, accountant or other professionals who may have experience with brokers.
2. Brokers who focus in your area of expertise
Are there specialists who directly focus in your line of business? There are general practitioners who serve a variety of sectors but there are also specialists who serve specific markets.
3. Is the broker part of a large organization
A couple of items to think about are;
- Do you require national reach or regional presence?
- What does a brokerage organization bring aside from size?
- How does the organization support you aside from a specific broker?
4. Track Record
What has a broker accomplished and how many listings do they currently have. Think about the following;
- Does a broker track record show success?
- What is the brokers completion rate of mandates that they undertake (IE. Do they close deals)
- Do you value someone with less listings or one with a number of listings?
5. Brokers marketing and sales process approach
How would a broker market the sale of your business and the process to assisting selling your business? Do they have targeted potential buyers, how do they publicly list, do they have a team to assist in marketing.
What professional organizations is your broker part of and how much time do they put into personal development? What are their educational background and area of expertise to your business? Have they run a business themselves?
7. Alignment on Value of your Business
This can be a typical roadblock. One item to look at is how does a broker approach valuing your business; for example, market comparable, precedent deals, cash flow analysis, and understanding the unique aspects of your business.
8. Location of Broker
Do you want to be dealing with someone who is close by or are you comfortable dealing with a broker who may not be located near you but is a fit based on area of expertise, qualifications, track record or other criteria you value?
These are a couple of ways to qualify a broker, understand what you value. Please leave a comment or question and let a business broker on Buyertise follow-up with a response. As always please refer to the terms and conditions on Buyertise.