You've decided to sell your small business and now you're ready to introduce your company to the business-for-sale market. For most sellers, a broker can help find a buyer and assist with your exit strategy. Choosing the right broker is important in order to maximize the sale price for your business and fund your next venture or retirement of your dreams. On the other hand, the wrong broker could have your business laying dormant on the market for months (or even years) or have you leaving money on the table at closing.
Don't let that happen to you. Follow these tips to choose a broker with the skills and experience to sell your business in the shortest time frame for the highest price.
Look for the Attributes of a Superstar
The first step to finding the best broker is to know what traits to look for. The business-for-sale market is littered with average brokers, but the best ones share the following characteristics:
- Specialized Experience: Look for a broker who specializes in selling businesses that are similar to yours. Even talented brokers could have trouble selling your business simply because they lack experience in your industry.
The best brokers should also have experience selling businesses in your geographic market and in your price range. Without this knowledge, the broker's pricing and marketing efforts may fall short of your sales objectives.
- A Verified Track Record: Be wary of a prospective broker if he's unable or unwilling to provide contact information of satisfied sellers of similar businesses.
Once the broker provides you with a list of previous clients, follow-up with them to confirm that the broker is in fact the superstar he says he is. Ask questions about the broker's personal style and attributes. Also inquire about strengths and weaknesses, then consider how those qualities might mesh with your goals.
- Connections: A broker who claims to be able to take your business from listing to closing all by himself is a disaster waiting to happen.
The best brokers have established relationships with lawyers, accountants and other local professionals -- and aren't afraid to call on them when they need assistance. Even if you decide to use your own lawyer or accountant, it's nice to know that your broker has the respect of other professionals in your area.
- Truthfulness: Pricing is the most common barrier to successfully selling a business. But for various reasons, many brokers don't tell their clients the truth about what their business is worth. Instead, they say what they think their clients want to hear, which can result in the sale process dragging on for several extra months. Superstar brokers are upfront about values, pricing and other sensitive issues despite the fact that it might not be the news their clients want to hear.
Finding the Superstar Brokers
Now that you know the traits of the best brokers, here's where you'll need to begin your search.
Local Referrals. One of the most common ways to find a broker is through local referrals. See who's listing businesses in your area and then discreetly verify their qualifications through your industry contacts. The trick is to get the information you need while maintaining a low profile prior to the sale.
Legal and Financial Professionals. There's a good chance that your lawyer and accountant are in the loop regarding your exit plans. Ask them to help identify superstar brokers in your area.
Online Directories. Not all online broker directories are reliable. However, with a little research, it's possible to find reputable directories that allow you to identify great brokers in your region.
Chamber of Commerce or Economic Development Office. These organizations usually possess up-to-date information about local professionals and may be willing to help you identify the broker who's most qualified to sell your business. To protect your confidentiality when dealing with local organizations, frame your inquiries in general, fact-finding terms and avoid specific details.
The International Business Brokers Association. The IBBA is a trade association dedicated to promoting professional standards among its members. The website features a tool to help sellers identify IBBA brokers in their area.
In addition to being IBBA certified, look for brokers that have received the designation of Certified Business Intermediary. A CBI broker brings additional training and expertise to your transaction, and can help you sell more quickly and profitably.