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 3:

 The big question for most business owners when the time comes for a listing agreement is:

“How would you price my business?”

The answer to this question will truly separate the good brokers from the bad.

 Why? A good broker will advise you to price your business so that it will be appealing to buyers and so that it will sell. A bad broker will let you answer the pricing question yourself and list the business for whatever you want, regardless of how ridiculous the price you demand sounds. We all want someone who will tell us what we want to hear, but in business transactions being told what you want to hear might be setting you up for failure instead of for success.

A good broker will go through your numbers with you, will show you comparable businesses that have actually sold (not listing prices, because for the very reason above they are an unreliable guage of what your business might actually sell for) and will discuss with you what they think you should list your business for and why. There are any number of factors, like the value of your inventory or multiples of your sales figures, that will differ from industry to industry. A really great broker will know how to use all of these factors to get you the best price possible for your individual business. A bad broker will try to use the same pricing method for every business they list, regardless of the size or industry.

The other major pricing mistake is made when a business owner has hired a good broker but then refuses to listen to their advice on pricing. You may want more than your business can give you, and you need to be realistic about pricing if you ever hope to make it to a closing table. If your broker has a comprehensive argument for a specific price range, you should consider it, as you hired them for their advice. It would be a waste of your money to ignore what they have to say.

Pricing your business appropriately right from the start will bring in eager buyers while your business is fresh on the market- the best situation possible. Get yourself a good broker and then listen to their advice on how to price your business.

Are you a business owner who has wondered what kind of price your business could bring? Have you talked to a few brokers and heard vastly different prices? Do you want to know if the price you have in your head is an appropriate one? Please leave us a question or comment here, and we will be happy to assist you with your listing questions.

Want to read Part 1 of this series? Click here.

Want to read Part 2 of this series? Click here.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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 2:

When you call up a business broker for the first time, the stat they will usually throw at you first is how many listings they have. This number may seem impressive in some cases, but the much more important question is:

“How many business transactions have you closed in the last year?”

A broker who will let buyers list businesses for whatever they want or brokers who will take any listing, no matter what it is, just to boost their numbers – these are not the people you want working for you. You want a broker who is selective in their choices of listings, and most importantly you want someone who is actually good at their job.

The easiest way to determine if a broker is good at their job is to ask them what their results have been- recently. Fifty closed deals is impressive until you find out that’s the total since they became a broker and they’ve been in business for 30 years. You should also ask if the number of closed transactions they are giving you are theirs or if they include the whole region or company (if they are part of a larger brokerage firm instead of a one-man shop). Many brokers in these larger companies will give company stats as their own.

An individual broker who has at least a few closings in the past year would probably be a better bet than a broker with 50 listings and only one annual closing. You want someone who can close deals because the point of putting your business up for sale is to sell it. It may also be helpful to point out hat the bigger the deal, the more time a broker must devote to it, so a few very large deals may mean more than just a few small ones, although it depends entirely on the brokers involved and the deals themselves.

The key here is to ask “How many business transactions have you closed in the last year?” because it will give you a good idea of the work ethic, results and knowledge/experience you will see in your own transaction.

Would you like to hear about the number of transactions we have closed in the last year? Do you have questions about what we could do to help you get your business sold? Please leave a comment or question here, and we will be happy to help you with any questions you may have.

Want to read Part 1 of this series? Click here.

 Want to read Part 3 of this series? Click here.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com

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.

Want to read Part 2 of this series? Click here.

Want to read Part 3 of this series? Click here.

Michael Monnot

941.518.7138
Mike@InfinityBusinessBrokers.com