Selling a business is no small beans. It’s a process that requires careful planning years in advance. Diomo Corporation reports that, at any one time, there are 15 prospective buyers on the market for every one business listed for sale. While this statistic is favorable for sellers, 50% of all transactions agreed to between the buyer and seller fall apart during the due diligence stage and never close.
Having a trusted business broker in your corner could mean the difference between selling your business for a fair price and not selling it at all. When it comes to finding the right broker for your business, there are a handful of questions you must be asking.
What’s your experience selling businesses like mine? How many have you sold?
The operational ins and outs of the restaurant business are vastly different from the ins and outs of an insurance company. For this reason, the sale of these two businesses will look very different and having a broker with the right experience is crucial. Don’t hesitate to ask your broker about their experience selling businesses within your industry including how many similar businesses they’ve sold.
Is business brokerage your full-time occupation?
It’s important that the broker you choose is dedicated to the sale of your business. Be wary of working with a broker who divides their time between a couple of different professions. Finding a buyer for a business and facilitating that transaction takes a tremendous amount of time and dedication. A broker working another job likely won’t be able to give your sale the attention it requires.
How many listings do you have right now?
If your business broker has a copious number of listings, they may be spread too thin. Conversely, if your broker has no listings, it could indicate a lack of motivation, possibly related to another source of income. A manageable number of listings for a full-time business broker is 3-7. Use this range as a benchmark for brokers you’re interviewing.
How many qualified buyers do you have?
When it comes to choosing the right broker for your business, it’s perfectly acceptable to ask each broker how many qualified buyers they have in their back pocket. You want to make sure brokers know their qualified buyers personally and aren’t just relying on a generic email list. Personal connections to qualified buyers and sellers are one of a broker’s biggest assets.
Do you help with contract preparation?
Structuring deals and drafting legal agreements are skills any experienced broker should possess. However, a good broker should also advise you to have your paperwork carefully examined by an attorney before details are finalized. Involving an attorney to review legal agreements helps reduce the liability for all involved parties.
The question isn’t: Is hiring a business broker a wise choice when it comes to selling my business? but how do I hire an experienced business broker who is motivated to represent my interests? Taking the time to interview potential brokers is a huge investment in the sale of your business.