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A business owner who has decided to sell his or her company is always best served by partnering with an experienced business broker. The challenge of hiring a business broker, however, is knowing the best questions to ask. Interviewing a business broker is much like interviewing a prospective employee, which in turn allows the owner to determine the best fit for the business.
1. Do you co-broker? How often? If a broker does not co-broker, it is usually because of a desire to keep all of the commission for himself or herself; meanwhile, your buying pool is more limited. A business owner should work to find a firm that is willing to co-broker. Ultimately, co-brokering is in the best interest of the business and will help sell the business in the shortest amount of time for the highest possible price.
2. How many brokerage offices do you have or are you affiliated with? Many brokers will not co-broker, but perhaps they are part of a national business brokers’ alliance and may co-broker within their own organization.
3. Will you spend money on marketing my business, and how much? It is the firm’s decision, not the broker’s, whether money will be spent to advertise a listing. A business owner must get clarification about how much marketing the firm and its owner are willing to support. If a broker is reluctant to give a clear answer, the broker may simply be a “lister,” and not someone who is savvy enough about the economics of marketing to be able to sell the business quickly and profitably.
4. How and to whom will you market my business? Assuming there is a marketing budget, the next questions concern the marketing plan. What marketing material will the broker provide to prospective buyers regarding the business? Which websites will the broker use to market the listing? The ideal business broker creates a creative and strategic marketing plan that reaches beyond the typical internet marketing on mutable websites. An even better broker will compose a complete prospectus on the business to present to prospective buyers.
5. On average, how long does it take you to sell? Some businesses sell quickly; others take quite a while. In the end, though, the broker’s average time to sell will offer a relative idea of how long the business may be on the market. The industry average is 12 months, and an experienced broker will quickly know his or her average.
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.