Finding the Right Business Broker for Your Business Sale
When it comes time to sell a small or medium-sized business, most owners will benefit from working with an experienced business broker. Although it's possible to sell your business on your own, few business owners have the necessary experience and time to execute a successful business sale while simultaneously operating and growing their business--a critical focus as a performance downturn is the last thing an owner wants when selling his/her business.
To maximize their business sale outcome and ensure they sell for a fair market price, most owners will find it helpful to assemble and utilize a sales team consisting of an experienced business broker, a trusted attorney, their CPA and other professionals. By leveraging the expertise of business transfer experts, sellers can concentrate on keeping their companies strong--which ultimately results in a higher sale price.
Why Use a Business Broker?
There are several reasons why it's important to enlist the assistance of a business broker when selling your business:
For starters, business brokers are advisers who offer in-depth insights on valuation, marketing, prospecting, negotiations and other fundamental sale elements. Additionally, most have extensive prior business experience that allows them to understand the financial, operational, and legal issues of your company and help guide you to make your company more saleable. Their role as sale facilitators streamlines the process, allowing them to focus on the deal while you continue to operate the business.
Experienced business brokers understand the art of getting multiple qualified buyers to the table for any given business sale. When there are multiple parties interested in buying a company, two very good things happen: First, the seller has much better chances of getting the fair market value for their business and reaching more favorable sale terms. Second, the risk that a sale is never consummated is greatly reduced.
As professional negotiators, brokers know how to overcome the many obstacles that often prevent a sale from closing. They don't fall prey to personal emotions and can leverage their experience to help you receive the best possible price and terms for your company. Additionally, they keep the deal on track ensuring that all parties meet the necessary deadlines--a key contributor to a successful sale as time kills deals.
Business brokers know how to preserve confidentiality during the sale and marketing process. Most sellers appreciate this as it helps them control the timing and way that their customers, employees, suppliers and competitors learn that they are selling their business.
In essence, business brokers are "quarterbacks"--experienced business people and proven sale pros who can assess your business and tap into an array of resources and professional networks to help you best achieve the objectives that matter to you when you sell your business.
Tips for Finding the Right Broker for Your Sale
My role at BizBuySell.com allows me to routinely interact with top business brokers and industry leaders. If there is one thing I've learned over the years, it's that finding the right broker is an essential part of a successful business sale.
Since it may be difficult to find a broker that is the perfect fit across all dimensions, it's important to consider your selection criteria and focus on the broker characteristics that are most important to you.
With that in mind, here are some tips about how to find the right broker from the experts themselves:
1. Tom West, founder of Business Brokerage Press
As a business seller, you need to make sure your broker understands that he or she represents your interests--not the buyer's. Rather than just facilitating the deal, the broker should do everything possible to help you achieve the highest sales price. If he or she doesn't build your confidence in this regard during your first meeting, look for someone else.
While conducting a proper valuation is a critical step early in the sales process, you should be wary of brokers that are interested in getting money up-front for a valuation. While not always the case, these brokers may be more concerned about selling their valuation service than they are about selling your company.
Sellers need to understand that the success of their business sale will be influenced by their relationship with their broker. Throughout the process, you must be comfortable enough with your broker to speak honestly, be certain that they will speak open and honestly with you, and trust your broker's advice and decisions. This strong two-way relationship should be evident early, even during your broker selection process.
Additionally, sellers should consider prospective brokers' track records and professional credentials. IBBA (International Business Brokers Association) membership, attainment of their CBI (Certified Business Intermediary, a designation awarded by the IBBA to members who have satisfied the educational requirements and conform to the high ethical standards of IBBA) and other accreditation can ensure that brokers have met certain professional standards and are accountable to their peers.
3. Roger Murphy, president and CEO, Murphy Business & Financial Corporation
The first thing a broker should do is to analyze the seller's goals and reasons for selling. This information forms the foundation for the proper marketing strategy the broker will employ. If broker candidates rush through this part of the discussion, it could be a sign that you should move on to a different broker.
Likewise, prospective brokers should take an interest in learning the mechanics of your business and ask questions that provide insights about your business model. In addition to helping the broker market your company, a thorough understanding of your company's strengths and weaknesses will prove invaluable during the negotiation stage.
4. Andy Cagnetta, CEO of Transworld Business Advisors
Your broker should be a trusted adviser in the community and respected by his peers. It's important to make sure that broker candidates have solid relationships with law firms, accountants, bankers and other professionals. A track record of giving back to the community or serving on nonprofit boards is yet another sign that the broker is well-connected and established in the area.
When you evaluate prospective brokers, it's critical to ask them about their advertising budget and how they plan to build awareness for your business sale. In addition to listing your business on top business-for-sale marketplaces like BizBuySell.com, your broker should articulate a comprehensive online and offline strategy for promoting your business opportunity to targeted buyers.
5. Ron Johnson, chairman of ABI Business Sales andfellow of the IBBA
When you first meet with a prospective broker, he/she should discuss how they plan to identify and screen potential buyers, detailing the types of questions they intend to ask. In general, the best brokers interview buyer prospects for several hours to ensure that only the most qualified reach the later stages of the sale.
There are countless details your broker will manage throughout the sale process. However, you should also make sure that your broker will help manage the emotions of the sale. How? By asking you about and clarifying your sale goals early in the process and repeatedly discussing and helping you manage your expectations to facilitate a smooth exit from the business.
When everything is said and done, the success of your business sale will be largely determined by your broker's efforts and abilities. Consequently, one of your most important sale actions is to invest time and energy in finding the broker that is the right fit for your business and your specific sale goals. Nobody's perfect, but with a little work you can find a great business broker that will help you achieve your most important sale objectives.