How to Choose a Business Broker to
Sell Your Business
Choosing the right business broker, and agency, to sell your business is important. Your business is probably your most valuable financial asset. Selling it for the best price may have a big impact on your future. If you are like most business owners, you may only sell a business once in your lifetime. This means that you are not experienced at doing so and hiring the right business broker is important. Here are some characteristics to look for when choosing a business broker.
Sarah Grossman and Marc Gudema discuss what to look for in a business broker to sell your business.
First, on a personal level, be sure you are comfortable working with the broker. Selling a business takes time, is stressful, and there are likely to be issues to be worked out between the buyer and you. Be sure the business broker is someone you are comfortable working with and has the temperament to handle people and resolve differences.
In Massachusetts, there are no licenses required to sell a business. A business broker does need a license to sell any included commercial real estate. This means that anyone can become a business broker. You need to look at their qualifications. What higher education do they have? What professional credentials have they earned? What business experience do they have? What experience selling businesses do they have? What are the sizes and types of businesses they have sold?
The primary way to sell your business faster for the best price is to introduce it to the most buyers. Look at how effectively the agency markets businesses. Most business broker agencies will have a website and advertise on Internet websites. Do they do so? On what Internet websites? Are they paying extra to have their businesses shown first? How many buyers visit their website daily? Do they co-broke with other brokers? Do they have a buyer database? How do they communicate with the database? Do they identify and do mailings to potential industry buyers?
How professional and productive are they? Do they have an office or is the closest Dunkin Donuts their office? Do they have an administrative assistant to handle the administrative tasks which allows them to spend more time selling businesses? Will they prepare a professional presentation about your business?
How will the business broker achieve your other goals in selling your business? For example, what percent of their sales are financed by lenders vs. sellers? How do they screen buyers and maintain confidentiality? How disruptive to you will the process be? How often will they communicate with you? What does the business broker do to manage the process to a successful closing when the business is under agreement?
Experience selling your type of business is helpful. After selling the same type of business, the broker should know more about your type of business, any special steps in completing the sale, and, perhaps, potential buyers. Depending on the type of business, this can be more or less important. Don’t make this your only criteria.
How much does the business broker charge for their services? If they charge an upfront fee, how much is it? Although the fee is important, keep in mind that a superior business broker may get you a much higher price for your business than the amount of their fee.
Finally, check references and ask the reference questions related to your concerns and how the business broker handled them.
BayState Business Brokers, 60 Kendrick St., Suite 206, Needham, MA 02494
T: 617-562-5700, F: 617-562-5701