Individuals spend years building a successful business. When the time comes to sell the venture, doing so often presents a challenge. Finding the right person to take over the organization when the industry is on a downturn or unsolicited offers aren’t commonplace can be difficult. A business broker becomes of great help in finding the right buyer for a business.
Business brokers maintain a pool of buyers to make it easier to connect buyers and sellers, and they use a structured selling process to ensure both parties receive fair treatment. The broker helps navigate the complexities of the sale. However, a seller must choose a broker, and this concerns many people in this situation. If you need help finding a business broker, the following eight steps become of great help.
Always ask friends and family if they have used a business broker and which company they chose to work with. Extend the search beyond your immediate circle. Speak with your attorney, accountant, suppliers, and others within your industry to develop a list of companies to contact.
Visit the International Business Brokers Association to obtain a list of brokers in your area who work in your particular industry. The association maintains a list of more than 1,000 intermediaries across the globe. This nonprofit trade organization educates individuals, allows for networking, and provides professional training.
It falls on the seller to research any broker they plan to use. Learn about their background, credentials, and experience within the industry. Have they been disciplined in any way, or have there been numerous complaints against the broker? Always request references and follow up with these individuals.
Never pay a broker a large fee prior to the sale. Most brokers charge between ten and 15 percent of the sale price, but this fee isn’t paid until the transaction is complete. The broker shouldn’t ask for money upfront to value the business or begin an application process.
Choose a business broker who handles business sales full-time. This adds more value to the transaction when compared to working with someone who sells businesses only part of the time. The full-time broker maintains a large network and better understands the complexities of valuing a business. When searching for a broker, refer to the IBBA’s code of ethics and consider using a merger and acquisition broker if your business is valued in the millions. These sales come with complexities not seen in smaller transactions.
Don’t let employees and suppliers know about the sale until it is complete. This ensures they don’t abandon the ship. Keep the sale confidential until it is turned over to the new owner and then let everyone know it is a done deal.
A reputable business broker doesn’t share information about the sale with anyone other than potential buyers to ensure problems don’t arise. People who have made the mistake of sharing the sale of the business prematurely found that it negatively impacted operations in some cases and potential sales as a result of this disruption.
Know how the broker will market the business. It must be in front of the right people for a successful sale, and the pool of potential buyers needs to be as large as possible. Ask to see the marketing plan, which should include advertising strategies and their details. If this plan cannot be produced, choose another broker.
Brokers should never pressure their clients. Don’t make a rash decision because you feel forced to by someone else. Selling a company takes time and effort, and the broker should remain professional throughout the process.
When the time comes to sell your business, find a reputable broker to work with. The following tips become of great help in choosing this individual. Keep looking until you find someone you feel comfortable with and who has your best interests at heart. This helps to ensure a successful sale for everyone.