Sometimes business brokers get a bad rap and in most cases it isn’t deserved. What is most important for the success of your business sale is enlisting the right professional to help you. The handful of bad business brokers out there have made business owners apprehensive about getting the help that they desperately need during a business sale. What you need to do before you list your business with just anyone or with the first name you found online is ask questions. Save yourself the bad experience and get a good broker right off the bat.
How do you find a good broker? Again, ASK QUESTIONS. What follows are a series of articles about the questions you need to be asking a potential broker and why:
What kinds of questions should you ask a broker before you let them list your business? Part 1:
This first question might seem a bit silly at first glance, but it is critically important.
“Are you really a business broker?”
Many other professionals moonlight as business brokers. What these moonlighters lack in terms of experience and market knowledge will cause major problems with your transaction. Typical offenders in this category are real estate agents, CPA’s, and attorneys.
Selling a business is almost nothing like selling a house or even selling a commercial property. Confidentiality needs to stay in place to protect you as the seller and your business, so businesses don’t have open houses and brokers don’t give out addresses of businesses for “drive bys” with buyers. If your “broker” suggests either of these marketing techniques, they are probably not a professional business broker. A professional business broker only discloses your business as one that is for sale to potential buyers who have signed the appropriate non-disclosure agreements. Ask any potential broker about how they intend to keep your confidentiality in place.
Your accountant knows even less about the sale of businesses than a real estate agent, so only use them for your books. What typically happens in this instance is an owner will ask a CPA to help them set a value for the business and the listing price. This almost never turns out well as a CPA doesn’t understand the nuances of business pricing. Seek the advice of a broker before deciding on a listing price.
Attorneys might be familiar with the legalities of business transactions, but rarely do they have the expertise to actually complete a business transaction. Your attorney has one job, to protect you from any and all legal risk. Business transactions, and business decisions of any kind for that matter, are inherently risky. Your attorney will not be able to reconcile protecting you from risk while advising you on business transaction matters. By trying to cover you completely from risk, they will ultimately kill any deal you try to strike with a buyer. Use a business broker instead, as they are able to advise you more appropriately throughout a transaction without killing a deal unnecessarily.
Remember to ask questions, especially “Are you really a business broker?” before you sign any kind of listing agreement.
Are you ready to sell but are unsure of whether or not you want to use a business broker for your transaction? Do you want to know more about what we would bring to your business sale process? Please leave us a comment or question, and we will be happy to get you the answers you need.