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.
So what’s the next step to selling up?
Generally, using a business broker is a good idea – especially if you have limited time to work with potential buyers, are not easily contactable or lack the necessary knowledge and skills to effectively market and sell your business.
Alternatively, if you are proficient as a salesperson and have a good network that you can reach out to, you may choose to list your business as a ‘private sale,’ i.e. no agent or broker is involved in the sales process.
What you need to ask a business broker?
Before you choose which way you wish to go, it is always good to discuss the options with those who make it their full-time job. Seek to understand the strengths of using a business broker by interviewing a few – asking the following questions:
What experience do you have selling this type of business?
Not all businesses are equal, and ideally, you want to engage a business broker who has experience marketing a business similar to your company. Why? Your business may have more ‘goodwill’, and that may need more explanation to attract a buyer.
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.
Are you affiliated with any networks, associations or trade groups?
With this question, you’re seeking to understand the broker’s reach – insofar as their access to potential business buyers. Listing a business for sale on sites may not be enough to attract the right buyer. A personal approach may be required, so you need to know your broker is well connected with entrepreneurs, business owners and investors.
How will you go about marketing my business?
You may get lucky and get the information you need so you can consider using the same marketing strategies to market your business for sale without using a broker.
How many active buyers in your database, and how useful is 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.
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.
How and how often will you report on the interest and activity?
Get the detail so you can set the right expectations for activity and results.
Can I have a copy of your listing contract and fee structure?
You will need to understand what you’re signing up for and how much the service will cost.
How hard can it be to manage the sale of your business?
You will find out through asking brokers questions. Did you notice we provide nine, not 12, questions? You will need to ask questions more specific to the nature of your business, including whether the broker needs a global or local presence.
Through quantifying the value of engaging a business broker, you’re getting valuable intel on what’s required to list and market a business for sale. You’re also able to determine how successful the brokers are likely to be in finding the best buyer at the best price for your business.