Business Broker – How to Select the Right One
You decided to sell your business and to hire a business broker to professionally assist you in this uneasy task. How to select the right business broker? There are so many around: individual brokers, small offices, national franchises – go figure…
A simple truth is your success depends on skills and dedication of a particular business broker who is your listing agent. It doesn’t really matter how big is the office and how many people are standing behind the agent. You have to establish rapport, and feel comfortable working with that particular person. It can be done via telephone or in-person interview. Telephone interview will save you a lot of time, so I suggest to start with it.
One very important piece of advice – don’t hire real estate agent who occasionally sells businesses. The very first question to ask – is the broker sells businesses full time? Hire only professional business broker who sells businesses full time.
Another important piece of advice – don’t make amount of commissions to be a deciding factor in hiring an agent. Common saying „you got what you paid for“ works here exactly same way as everywhere else. Business brokers generally charge between 8 and 12 percent commission for businesses priced under one million, and you definitely don’t want to get the cheapest one. By the way, if an agent is asking 6% commission, most likely she is a real estate agent – red flag! Another red flag is when agent is asking for any money upfront – no, no, and no!
Ask candidate to describe step-by-step activities that he/she will be performing for you. Make sure that you understand everything, ask questions.
At Global Business Group we start with helping you to determine the purchase price. Agents shouldn’t ask you for the purchase price, they should help you to determine one based on multitude of factors related to the business. However agent may ask you if you have a particular price in mind, just to see how close or far your expectations are from calculated fair market value. This business valuation is generally done free of charge if you’re signing a listing agreement. However, expect to pay a fee for business valuation services in case the agreement hasn’t been signed.
Ask a broker where your business will be advertised. It should be advertised with at least 3-5 major business listing services. Make sure to confirm that your business will be advertised very discretely and that every potential buyer will be asked to sign confidentiality agreement prior to getting any information about your business.
Ask business broker if she will be cooperating with other brokers. Coop is obviously beneficial to you because it increases chances of selling.
And finally, be as opened with your agent as possible. It just doesn’t make sense to lie or hide anything from him or her. You are on the same side. I always tell my clients who come to us to be as honest and opened about their business affairs as possible. If agent knows the truth he/she can package and present it to buyers in such way that is acceptable to them.