Many business brokers will be qualified to help sell your business. Which one is right for you and your specific sale? Savvy business sellers know that a good business broker brings experience and expertise to the sale process, significantly improving the seller’s ability to attract prospects, overcome hurdles, and negotiate and close the deal.
Finding a business broker is easy. But finding the broker that is right for your sale can be a little more challenging. In addition to making sure that the broker has a solid track record in your industry, you’ll want to find a broker that is aligned with your goals and expectations.
Finding the Right Business Broker
After you have decided to sell your company, it’s helpful to meet with multiple brokers to identify the one that is the best match for your unique needs and sale objectives. You have spent years building your business. You owe it to yourself to interview a number of candidates. As you go through this process, keep the following in mind when comparing brokers.
#1 Beware of Generalists
It’s not enough to Google any brokers you’re considering using and call their references. Part of the vetting process includes making sure your broker is the right fit for your business. For starters, you want a broker who specializes in selling the type of business you own, be it a dotcom, a restaurant or a graphic design firm.
#2 Size Does Matter
Also critical is whether the broker you choose typically handles transactions of your size. “If they handle $10 million deals and your deal is $3 million, they’re not going to give you the level of attention you need,” says Vanessa Troyer, co-owner of high-end mailbox manufacturer Architectural Mailboxes, who in 2008 sold a million-dollar online business for with the help of a broker.
Keeping Your Head in the Game. Another key detail is how the broker will keep you apprised of interested prospects and the transaction status. “You want to have weekly status reports, calls, and updates,” says Toby Corey, who’s currently using a broker to sell his company, the sports entertainment site NBX Inc. “If you allow yourself to be back-burnered, you’re not going to get their mindshare.”
#3 Negotiate the Fee
Typically, business brokers make their money by collecting a commission on the sale of your business. If you are asked for money upfront, that’s a big red flag. That’s not common protocol.
Although the average commission brokers make is 10 percent, like everything else in business, that figure sometimes can be negotiated.
#4 Avoid Overcommitting
In all likelihood, your relationship with your broker will be a lengthy one. On average, it takes nine months to a year to sell a business — from the time you and your broker start assembling a comprehensive marketing package for your business to the time the sale closes.
Although it’s customary for brokers to ask their clients to sign an exclusivity contract, that doesn’t mean you have to sign your life away for the next year-plus. Six months is typically the minimum contract. However, contracts as short as 90 days are not uncommon, typically with a 90-day renewal option at the end.
#5 Trust your Instincts
While you don’t need your broker to be your best friend, you do want to hire someone you’re compatible with. You have to work really well together as a team and have a good chemistry. You want to see the world the same way, see the opportunities the same way, because it really is a partnership to get your business sold.
#6 Learn the Business
The best brokers take time to learn why their clients are selling their companies and what they hope to achieve from the sale. Without this information, it’s impossible for the broker to negotiate a deal that accommodates your desired financial and non-financial outcomes.
Likewise, broker candidates need to demonstrate an interest in learning as much as they can about your business during the initial meeting. By gaining insights about the mechanics of your company, the broker will be in a better position to market your business to the right prospects. Most importantly, don’t lose sight of the fact that a good broker first and foremost represents your interests over the interests of the buyer.
Ask Lot’s of Questions
Business brokers should be transparent in their approach to clients. They should instill trust, a desire to learn how your business works and offer fair terms for their services. It is important not to overcommit to a particular broker—six months is standard—and following your intuition helps. It’s hard to work with someone you don’t trust. Be sure to ask enough questions to satisfy all of your concerns.