Finding a talented business broker can make the difference between getting your sale price or not selling at all. Do keep in mind that choosing a business broker to sell your business will not be an easy task, but one that is worth taking your time with. Like any business relationship, it pays to do your homework and ask a lot of questions to ensure you’re partnering with the right broker for your needs.
Take the time to talk with several brokers before you develop a short list of your top two contenders. Armed with this list of questions, you can probe for the answers you need to determine which broker is the best match for your exit plan. Start choosing a business broker by simply asking these 5 questions:
- “How many years of experience do you have?”
As in every business arena, there are always newbies looking to break in. You want a superstar with a track record and the ability to back it up with references. If a broker refuses to provide a list of satisfied sellers they’ve worked with, it’s a red flag.
- “Have you ever sold a business like mine?”
Experience in your industry means the broker is more likely to have the contacts in place to better market your business. However, this is not necessarily a deal breaker. A long track record in your geographic area, and experience in related industries, can make up for it. Ask the business broker how he/she will compensate for their lack of direct experience with your type of business.
- “What is your Closing Ratio?”
This is far better than asking, “How many businesses did you sell last year?” Why? Because the ratio between businesses listed verses businesses sold tells you a lot more about the broker’s talents. You don’t want a broker who plays a numbers game by listing a bloated amount of businesses to increase the number of their successes per year. Closing Ratios around the 50% mark or lower aren’t much better that the 50-50 odds against you selling your business by yourself. (FYI: my Closing Ratio is near a 100%.)
- “Do you have relationships with private lenders to assist buyers with Acquisition Loans?
In an ideal world, every buyer has excellent credit, a huge down payment and easily gets a loan approval from traditional bankers. But this is not a perfect world. When a broker can bring private lenders to the table, it benefits the buyer and seller alike.
- “Can you provide me with a copy of your Confidentiality Agreement to review?”
If the broker doesn’t use a professional Confidentiality Agreement, it’s a big red flag. Move on. If they do have one, find out if it prevents you, the seller, from finding potential buyers on your own. Also ask for written details on their advertising and marketing plans. Remember – if they’re not willing to put their promises in writing, they’re not likely to keep them.
Now that you have the questions to ask to help you in your journey for choosing a business broker that will get you what you need, why not start your search for a great broker today?