Before you hire a business broker, you need to ask them a few questions. There are actually several questions that should float around in your mind, but we will condense them down to five. By asking these questions, you can get a better idea of how the broker can help you. This will avoid choosing someone who will not provide the results that you desire.
What is your experience level?
Business brokerage is a very defined niche industry with not a lot of specific curriculum that can educate a broker. Therefore experience carries a lot of weight in the selection of a business broker. You want a broker that has a well defined resume of businesses sold. A subjective comparison is would you want a doctor who is performing their fourth surgery to be operating on you or would you want a surgeon who has performed over 100 surgeries. The same can be said about business brokerage. Make sure that you learn about your brokers experience and how that relates to selling your business.
How do you determine value?
A good business broker, no matter the type of business, will have specific ways to determine the value. They should make sure that their methods of determining value are personalized to your type of business. Valuation of a business is critical to a successful sale. Pricing the business too high will allow the business to sit stagnate on the market. Pricing too low will leave money on the table for the seller. You want your broker to provide a realistic value backed up by research of previously sold businesses and solid valuation methodology.
How realistic is your pricing?
Realistic pricing is a vital part of selling your business. A good broker will stick with the range of their proposed value because to do otherwise is a disservice to the client. Setting unrealistic expectations on pricing and then not being able to reach those expectations serves no purpose in the sale of the business. The ultimate goal is the seller wants to sell and move on. If your broker starts to waffle on pricing, it may be an indication they are more interested in getting the listing than being a trusted advisor.
What steps will you take to preserve confidentiality?
An essential part of selling a business is ensuring that no one knows the business is for sale other than prospective purchasers. If people involved in the business, including customers, vendors and employees hear the business is on the market, it could lead to unwanted reactions. This could make current business operations, and ultimately selling the business, more difficult. A good broker understands this and has methods to keep everything quiet. Ask, so you know what to expect.
You have to interview your broker and know the exact type of work they have performed in the past and know their experience level and track record. Remember, the ultimate goal is to sell the business. Take all the variables in evaluating your broker into consideration and ask yourself does the price make sense and why? Does the broker have a successful track record? How will the broker protect my interests such as confidentiality? If in your interview your broker can satisfy these main concerns. I think you have found the right broker to sell your business.