If you’re selling your business, you can go through the stress and risk of selling it yourself, or you can hire a business broker to help ensure that you achieve maximum value. Brokers boast years of experience. They know what works and what doesn’t, and they know how a transaction should proceed. They can level the playing field between you and the buyer, offering a significant advantage at the negotiation table.
As you contemplate your options, here are some factors to keep in mind.
Relevance is as Important as Experience
A good broker has years of experience. Experience, however, is not all that matters. The right broker for you is one who has relevant experience. Ask for details about relevant prior transactions. The more recent those transactions are, the better; if they’re from ten years ago, it might mean the broker doesn’t have current, relevant experience.
Sale Preparation Matters
A sale isn’t a one-time event. It’s a transaction that demands months, and sometimes years, of preparation. That preparation can mean the difference between bargain basement prices and walking away with a pile of cash. Yet preparation can be time consuming and exhausting. Good brokers make the process more manageable. Ask potential brokers exactly what they do to prepare for a sale. They should be able to outline a clear process.
Asking price is a key predictor of a successful sale. If the price is too low, it can scare away otherwise interested buyers and leave cash on the table. If it’s too high, you’ll get no bites and your business can languish on the market for months as you waste time trying to gin up interest in a sale. Sellers typically ask for a preliminary valuation before signing the listing agreement. Don’t get sidetracked by this number, though. What matters most is that the broker has a clear, specific methodology by which they achieved this number.
The Marketing Plan
Marketing your small business is about more than just putting it out on the market and hoping for the best. Value is always in the eye of the beholder, so a favorable sale price requires finding the right buyer. Good brokers know where to look and how to lure in attractive buyers. Ask about the broker’s marketing plan, marketing materials, and overall prospect identification plan.
An important part of this is asking for details about sale confidentiality. Revealing too much too early can kill the deal, and may even release sensitive information to competitors. So get clear about how the broker balances marketing the business with protecting sensitive data.
Hiring a broker is a bit like dating. Sometimes you have to trust your gut. You’re going to be spending a lot of time working with this person, so make sure you feel confident calling them, confiding them, and addressing concerns as they arise.
One important aspect of your work together is the broker’s ability to be responsive. A broker with a massive client load may be impressive, but can they respond when you need them? Ultimately, only you can decide if the broker you are considering is the right fit for you and your business.