Things to Consider When Hiring a Business Broker
When selling a business, you have two options at your disposal:
- Hiring a business broker
- Selling the business on your own
Although it’s possible to sell a business on your own, hiring a business broker is the best of the two options, as it guarantees a quick and stress-free sale.
The thing is, business brokers are highly experienced in selling businesses, unlike most business owners. They know the strategies that work and the ones that don’t work—thanks to their experience. This makes business brokers very valuable—especially when it comes to handling different tasks like business marketing or advertising, business valuation, interviewing prospects, conducting due diligence, and negotiation, among other important aspects of selling a business.
When you hire a business broker, you get the time you need to run your business and increase its value, as the business broker handles the complex details of the transaction. Now, when you decide to hire a business broker, always make sure that you do your due diligence and screen your options. Hiring an experienced business broker can prove the difference between a successful sale or a long and stressful sale.
So, whether you want to hire a new business broker or you are deliberating whether your current business broker is the right person for your future sale, the following are the top things that you should consider.
The experience of your business broker greatly determines whether your sale will be successful or not. With that said, you must check for how long the business broker has been in operation. How many deals does the broker close every year? Such kinds of questions will help you hire a business broker who guarantees an ethical process, delivering quality results, and can represent you professionally.
Besides, the individual experience of the business broker is very important. If the business broker has ever sold businesses like yours, they know the kind of challenges to anticipate, as well as how to guide the entire process to a successful sale. However, that doesn’t mean you overlook newer brokers. Such brokers have a lot of energy and motivation—meaning they can represent you well if they have strong support behind them. That means the broker can represent you as effectively as a business broker who’s been in the industry for 10 years.
Relevant certifications and designations
This is another important thing that you must consider when hiring a business broker. Generally, most business brokers lack the formal training, as well as relevant certifications and designations to do business appraisals or valuations.
Yes, you might come across a business broker who has taken an online training course or some weekend training classes, and they’ve gained valuable insights of the local market in the past few years. However, if you come across a business broker with official certifications as a business valuer or appraiser and Certified Business Intermediary (CBI) designation, you’ve found a very valuable resource.
Therefore, you need to check if the business broker has the relevant training and certification from any of the renowned organizations like:
- American Society of Appraisers (ASA)
- Institute of Business Appraisers (IBA)
- National Association of Certified Valuation Analysts (NACVA)
- International Society of Business Appraisers (ISBA)
You can check online reviews about the Orlando Business Broker by doing a simple Google Search for the name of the business broker. Also, doing a generic search like the “business broker + your city” can give you the broker’s online reviews. Going through the search results in your local maps will also give you the online reviews of each business broker. So, if the business broker you want to hire has been in the business for years, ensure that their positive reviews are more than the negative reviews.
Confidentiality is an essential part of selling a business. Therefore, it’s important to find out the strategies used by the business broker to keep the details of the transaction confidential. If your current clients and staff become aware of the sale, they might think that you are selling the business because it is failing—and you are selling it because you want to focus on other things. Besides, you don’t want your competitors to know that you want to sell your business.
An experienced business broker can create interest by giving teaser information—and showing their professionalism in advertising the opportunity, rather than the specific details of the sale. And, when a prospective buyer expresses interest in buying the business, the broker will need to qualify them to make sure that they are well suited to purchase and run the business. After qualifying the buyers, the business broker will make sure the prospective buyer signs a non-disclosure agreement (NDA) before releasing sensitive information about the business on sale.
The number of listings the broker has at the moment
Knowing the number of listings the broker is dealing with at that moment can give you a good idea of the time the broker will dedicate to selling your business. If a business broker has a large number of business listings, it’s an indication that they take any client who they come across. However, it’s good to note that this might work against you—even if the business broker is experienced in selling businesses.
Therefore, go for a business broker who has not more than 20 active listings. Such a broker guarantees to give your business the attention it requires for a successful sale. A business broker with fewer listings means that they know the attention and time each business listing requires.
Things to Consider When Hiring a Business Broker