If you feel it is time to sell your business, the best chance to make a profitable, safe and fair deal is to hire a business broker. The right business broker will process all the details of the transaction and ensure the proper representation of your interests.
This article will be useful to any business owner who is considering selling their company through a broker.
Read on to find out what questions you can ask your potential business broker.
1. What is the past experience of a broker?
The first thing to look for before hiring a broker is to check their previous experience in selling a business similar to yours.
Of course, the portfolio of your ideal broker does not have to fit your business perfectly. However, you can get off to a good start if the broker has worked for a company with the same business models and target buyers.
Hiring a broker with no experience selling a business like yours will result in a loss of valuable time that is better spent on searching and negotiating.
2. How many companies (such as yours) do brokers sell each year?
The figures vary depending on the city, industry, business size, etc., so it is best to ask this question to several brokerage firms and calculate the average yourself.
Also, to find a broker that fits your industry, it’s important to ask if they’ve sold any businesses your size. Selling a company worth $ 1 million and $ 50 million is completely different, so if a business broker hasn’t sold a business like yours, keep searching until you find a brokerage company with the right experience.
3. How will the broker evaluate your business?
Good brokers understand that valuing a business is quite complex and no formula applies to every company. So asking a business broker how they value a company is a good indicator of their experience.
Business valuation is a complex subject, so stay away from hiring brokers who use a general valuation formula. Instead, work with brokers who have experience and are in no hurry to conduct a thorough and accurate assessment.
4. How will the broker manage your privacy?
In the process of selling a business, it is very important to maintain the confidentiality of all parties involved. You don’t want to leak confidential business information like a potential buyer.
Also, when news of your imminent sale arrives, customers may think there is a problem and stop buying from you, while employees may question the stability of their work and look for work elsewhere.
Therefore, when selling your business it is important to hire a business broker who has security protocols to protect your privacy.
5. What do others say about the broker?
Investigate the experiences of your broker’s past clients to find out what business owners like you have said. When looking for broker reviews read the company’s sellers and buyers ’reviews to make sure both parties are happy with the results.
Before you officially hire your business broker, make sure he has a significant amount of positive feedback.
6. How do the broker’s opinions and values coincide with yours?
Of course, you don’t need to be very good friends to successfully do business with someone. However, you are probably going to work closely with your broker for a long period of time.
In addition, the broker will represent your business among potential buyers, so it is important to choose a person who embodies the values of your brand.
Therefore, it is important that you feel comfortable working, communicating and sharing confidential information with your broker.
7. What else can a broker offer you?
Before contacting a brokerage company, find out what their services provide. For example, in Triad Securities their trading service includes various other elements that will help reduce friction in your trading activities.
Triad of trade clearance services offers advanced e-commerce, multiple algorithm kits, multi-asset trading in the U.S. and internationally, as well as outsourcing and back-office services.
8. When does the broker expect to close the deal?
According to a BizBuySell study, nearly half of business owners surveyed believed the sales process would take less than five months. However, the IBBA MarketPulse report for the 4th quarter of 2018 found that the average closing time of a business sale transaction is more than nine months.
Of course, there are many strategies that brokers can use to speed up this time, but the length of the selling process depends on many other factors such as your industry, company size, net worth, terms of purchase, etc.
Even the most experienced brokers cannot affect all of these conditions, but the best thing you can do is hire someone who will be reliable, experienced and transparent with you.
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