Selling Your Business? These Are the Top Ten Questions to Ask a Business Broker
If you’re thinking of selling your business, there are two routes to selling it at maximum value. You can tackle the challenge ahead and sell your business by owner, or you can seek the advice and guidance of a business broker.
When looking for the right broker, it’s important to feel empowered by asking the right questions. No two brokers-- or brokerages-- are the same. Trust, integrity, radical honesty and care are needed to take a business successfully to the selling table. Times have been turbulent in the recent past, and having the right broker by your side can truly make or break your deal.
Here are the Top 10 Questions we recommend you ask a business broker when you want to sell your business.
1. What’s Your Valuation Process?
The level of a broker’s experience will be reflected in how they conduct a business valuation. Red flags will come by way of vague answers, sweeping statements, or generic approaches. Our recommendation is that you walk away once you see those flags.
2. How Will You Protect the Confidentiality of My Business?
The confidentiality of a sale is a critical matter. Confirm what policies are in place to keep the sale of your business confidential. Leaked information can wreak havoc on your operations. Furthermore, your competitors might exploit your misfortune to gain a competitive advantage.
3. Do You Have Qualified Buyers For a Business Like Mine?
A wide net is not necessarily the right net. The right types of prospects should be qualified and interested in a business of your nature. Seek out brokers who specialize in selling businesses like yours. The right price tag will attract the right prospects for your business. A good business broker can develop a realistic pricing plan and create deal tension, which may maximize your sales price.
4. What is Your Pricing Strategy?
A skilled business broker knows how to develop a realistic pricing plan to attract prospective buyers and create deal tension so you maximize your sales price. Asking this question will help you gauge a broker’s ability to land a deal faster.
5. How Many Years of Experience Do You Have as a Broker?
Given the times, it’s important to have solid business relationships when you want to enter a phase of transition. Today’s post-pandemic economy requires the emotional and financial intelligence of a seasoned broker.
6. What Do You Charge?
Payments and their processes should be clear from the start. Most business brokers prefer to take a commission, but some will charge a retainer fee for services or work that goes beyond the scope of the project. When a broker charges higher commissions, it usually motivates them to pursue a more competitive sales price.
7. Do You Have Experience Selling a Business Like Mine?
Simply put: selling a farm is not like selling an eCommerce company. Your correct broker will have the appropriate connections, market access, and the know-how to negotiate a good business tailored to your needs.
8. What Is Your Listing Term?
How long your company is listed for sale will play a factor in how it’s sold, and it’s a detail that is not to be overlooked. A listing term of one year is the industry standard; however, we recommend that you inquire about the contract length and the conditions in which the contract can be terminated.
9. How Will You Prepare My Company for Sale?
Be bold. Challenge the broker to elucidate each step they intend to take to prep your company for sale. Common steps that bring a company to market include:
Due diligence- how is it conducted?
Marketing- what materials will be created? How will they be promoted?
The final sales contract with the buyer- how is it negotiated and finalized?
Support- how do they intend to guide you through the steps?
10. Who Drafts the Final Sales Contract?
A truly professional business broker will work hand-in-hand with an attorney to ensure that agreements are properly structured before you sign. You will not want to go to sale without an attorney-drafted contract, so be sure to ask this question as soon as possible.
Asking your broker the right questions before committing to a long-term relationship with them is critical not only to the success of your sale but to the success of your company as you continue to work towards its transition to new ownership. It may also not exactly be the correct time to sell, and the right business broker should be upfront and tell you that too.
We have decades of experience buying and selling businesses here at Raincatcher. We have a team with skills that include attorneys, analysts, marketers, writers, and entrepreneurs just like you. We also have coaches who can help you build value for your company until the time is right to sell.
Please let us know if you are interested in selling or building value for your business. We’re here to talk, and we’re here to help you ask the right questions to find the best fit for your business.
Take the next right step on your business journey and ask yourself these questions: