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Selling a business is an undertaking that business owners should not attempt without assistance. No amount of online research and anecdotal advice can prepare a novice for the abundance of investigation, paperwork, marketing, and red tape involved in a business sale. The conclusion to partner with a business broker is a sound choice, indeed, but selecting the right business broker for the sale is a very crucial decision that should not be made hastily. A talented business broker will maximize value and profit in the sale of a business, while an inexperienced broker will cause the business to remain on the market longer than necessary and will cost the business owner more money in the long run.
Interviewing a business broker is very similar to interviewing a candidate one would hire as a regular employee. You must review the résumé, check references, and ask thorough questions.
1. How many years have you been selling businesses? It is true that one must get experience to have experience, but this is not the time to play guinea pig for an eager, fresh-faced broker who is looking to put sales under his or her belt. It is of the utmost importance that the seller select a business broker or brokerage firm that has many years of proven experience in selling businesses. If the broker is unexperienced but is working for a firm with an impressive track record, the business owner should consult with the firm owner to make sure that an experienced mentor will be working with the newer broker throughout the entire process.
2. How long have you been with (or owned) your firm? The answer speaks to the broker's experience level.
3. How many businesses have you sold in your career, and how many businesses do you sell per year, on average? At minimum, an average broker should complete 8-10 sales per year.
4. Where is your office? It is acceptable to hire a broker who works out of his or her home as long as the reasons are not worrying. Is the broker new to the industry and unable to afford an office? Is the agent a veteran broker who has simply chosen to scale back after many years in the business? Perhaps the broker keeps costs low by working from home instead of leasing space. It is not rude to ask for clarification. Many sellers tend to avoid using a broker that is local to their business due to a fear of having the sale information leaked to the local community, therefore harming the business's reputation. However, a business broker's insistence on confidentiality should be more important than their location.
5. How many listings do you have? Brokers with too few or too many listings may raise red flags for the seller, and with good reason. The average business broker will have 15-20 listings at once. If the broker has fewer listings than the average, is it because of a lack of motivation, or is it due to a talent for selling listings quickly? A broker who has more than the average number of listings may have an excellent support staff, allowing for a larger work load. It is important not only to ask about the number of listings, but to ask follow-up questions if the number varies greatly from the norm.
If you would like assistance with selling your business or determining whether partnering with a business broker is appropriate for you, please contact George & Company, located in Worcester, MA. We have honed our business skills over decades of appraising, selling, and financing small to middle-market companies. It would be our pleasure to assist you in making decisions that will best benefit you and your company.