Have you made the decision to sell your business? Well done. It’s not easy to conclude it’s time to move on, especially if there’s the option to bring investors onboard and keep your business.
So what’s the next step to selling up?
Generally, using a business broker is a good idea. However, you may be sitting on the fence about using one even when you may not have a lot of other options.
One reason to use a business broker is a lack of time. If you know you have limited time to work with potential buyers, and as such, you are not easily contactable, then don’t attempt to front the sale of your business. Plus if you’ve never sold a business, you likely lack the knowledge and skills to find buyers and sell it for a good price.
This business blog article can help you choose the right business broker. The following questions to ask a broker when selling a business will ensure you hire the right one. 🙂
Questions To Ask A Broker When Selling A Business
While the following list of questions may seem obvious – it’s easy to forget to ask all of them. Seek to understand the experience and knowledge of a business broker by gaining insight into these areas:
- Industry qualifications
- Experience selling businesses
- Sales success of similar businesses
- Buyer database and networks
- Selling process
To sell your business, you don’t need a top business broker. You need the most experienced and successful one within your industry. Business brokers specializing in a location or sector have the buyer network, database, and contacts to reach out to for intel and market knowledge.
1. What experience do you have selling this type of business?
Not all businesses are equal; ideally, you want to engage a business broker with experience marketing a business similar to your company. Why? Your business may have more goodwill, which may need more explanation to attract a buyer.
2. How much do you think my business is worth?
You’re not likely to get the answer you’re looking for, nor should you put a business broker on the spot with this question without presenting your financial summary. Your accountant should be engaged to present the financial position of your business, and only when this information is available can a business broker provide a guesstimate of a sales price.
3. Are you affiliated with any networks, associations, or trade groups?
With this question, you’re seeking to understand the broker’s reach. What you want to know is their access to potential business buyers. Listing a business for sale on sites is usually not enough to attract the right buyer. If it was that easy, we’d all do it, and there’d be no need for a business broker.
Your broker should be well-connected with entrepreneurs, business owners, and investors and ideally know some of the leaders you know.
4. How will you go about marketing my business?
Business brokers are salespeople. They will have skills in marketing and sales. What you want to know is what they intend to do for you to sell your business. Will they use social media? Will they use industry magazines? Get evidence of successful marketing campaigns that they managed to attract buyers.
5. How many active buyers are in your database, and how useful is this?
This a good question, but I don’t expect to get an exact answer to this question. A more likely response will be an estimate, e.g., we have 2000+ active buyers. You could ask a more targeted question e.g., how many active buyers do you have that you believe will be interested in my company?
6. Can you tell me about some of your recent sales and provide references?
All active brokers will have evidence of their sales history and a list of happy customers.
7. What are your prospective buyer reporting and feedback process?
Get the details to set the right expectations for activity and results. Your broker should use a CRM like SalesForce to manage their activity and reporting.
8. Can I have a copy of your listing contract and fee structure?
You will need to understand what service you’re signing up for and how much it will cost. This is when you seek legal assistance to review the contract to ensure you understand your legal obligations. Plus, your lawyer may wish to do some investigative work on the broker to ensure he or she is a professional.
Use Business Broker or Do It Yourself
After you have interviewed a few business brokers, you will have ample data to weigh the benefits of using a business broker versus managing the sale yourself. If you are a proficient salesperson and have a good network of business owners to whom you can reach out, you may list your business as a ‘private sale,’ i.e., no agent or broker is involved in the sales process. However, if you are the CEO of your company, you’ll be busy working on your business, so time to manage the sale process will be hard to come by.
Another reason to use a business broker is objectivity. As the owner of your business, you are emotionally involved, and that passion for what you have created will cloud your judgment on what your business is worth and how to accept criticism from prospective buyers during the negotiation process.
Selling your business is emotional and a tough call to make. To get the best person fronting the sales process, you will need a list of questions to ask a broker when selling a business. There are no right or wrong questions to ask a business broker. You’ll want to make the time you spend interviewing business brokers worthwhile so take your time creating a list of questions that best deliver the information you need to make a quick decision on which business broker is best equipped to sell your business.