Whether you are a business buyer or a business seller, the best way to navigate the business transaction process is with the help of an experienced and qualified business broker.
How can you tell if the broker you’ve been talking to is experienced and qualified? Let’s start by finding out how a person becomes a business broker in the first place.
To become a business broker, someone first needs to have an interest in helping people buy and sell businesses. Business brokers come from all kinds of backgrounds – they are former entrepreneurs, former finance professionals, former real estate brokers, etc. The experience of business ownership and a background in finance are obviously helpful, but aren’t necessary.
When a business broker first starts out, they must obtain the same license a real estate agent needs (there is not a special license for just business brokers, so they get lumped into the real estate industry). Once they have this license they need to work as a business broker/agent for someone who is a licensed broker (just like a real estate agent works for a real estate broker) for two years and then they are eligible to become a licensed broker on their own.
It is not necessary, however, for a broker to ever get the “broker” license if they continue to work with someone who is already licensed this way. As such, if the business broker you are working with doesn’t have the “broker” license this is not a bad thing. In fact in many instances broker/agents work within business brokerage firms for many years with great success without ever getting a “broker” license.
When you first begin speaking with a business broker, you can ask them about what kind of license they hold, but the answer to this question is not as important as you might initially think.
Lots of people have a real estate license but never actually sell a house – and, unfortunately, lots of people also try to dabble in the business market. We come across realtors, lawyers and even doctors who try to be business brokers “on the side”.
As a buyer or a seller, you want to stay well away from these part time brokers. Buying and selling businesses is a complicated process, and you are going to want someone who actually knows what they are doing helping you through your transaction.
You wouldn’t let your family practitioner perform plastic surgery on you – so don’t let a real estate agent or your dentist try to help you buy or sell a business.
Now that you know how a person becomes a broker, what are the questions you should be asking to find the right one? There’s two that can tell you a lot:
1. How many deals have you closed in the last year?
A broker who regularly closes deals is probably well established and clearly knows what they are doing. They have connections within the industry, they know how to successfully negotiate business transaction contracts and they are able to work with commercial property owners to get their clients a lease.
2. How many clients have referred you to a friend or have used you more than once?
A broker with repeat or referral clientele is someone that others have enjoyed working with. The experience was so positive they would trust that broker with their personal connections. Like a great review of a business, referrals and repeat transactions speak volumes about what your experience with that broker will probably be.
The message here? Ask the right questions and you will quickly find out whether the broker you have been speaking to is the right person to help you with your transaction.
Are you looking for a business broker and have more questions about how to find the right one? Want to ask us about how many deals we have closed or how many referrals/repeat clients we have? Please feel to leave us a comment or question here and we will be happy to get your questions answered.
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907