Hiring a business broker can make the process of selling a business very easy. A qualified and experienced broker can help to maximize the sale price of the business, thus guaranteeing you the most favorable terms of the deal. Hiring the wrong broker, however, can slow the entire process, and drain your money without any success.
With that said, it’s important to understand the things you should and shouldn’t do when choosing a business broker if you want the process of selling your business to be successful. With that said, let’s look at the top dos and don’ts when choosing a business broker.
Do trust your gut
While you don’t need to hire a business broker that you personally know, you should hire someone that you are comfortable working with. For the process to be smooth, you need to hire a broker with whom you can work together as a team. Once you hire the broker, you will need to see everything from the same point of view, because it’s partnerships that get businesses sold. So, if you are uncertain about the business broker, trust your gut—that’s what brought your business where it is today.
Do your due diligence
Just like the way your prospective buyers will do their due diligence, so do you. Take your time to research the business broker’s experience, background, and credentials. Check whether there are any lawsuits or complaints about the business broker. Also, it’s important to check whether the broker is listed with the Better Business Bureau (BBB). Has the broker sold a business like yours before? These are some of the important things that you must consider when hiring a business broker.
Do ask about the preparation method
When asked, any professional Business Broker, Orlando shouldn’t have a problem with sharing details on how they will prepare your business for sale. Therefore, make sure that you enquire for details like prospective buyer lists, important improvements that you should do to improve the value of your business, as well as the preparation for tax returns. If the business broker seems to be in a hurry and doesn’t pay attention to the preparation process, consider hiring another broker.
Do check if they have connections
Other than your business broker, you will also need other professionals like small business valuation services, attorneys, accountants, and bankers when selling a business. If the business broker has connections with professionals, it means you won’t have any problem finding them. However, you need to understand that all professional business brokers don’t network the same way. But, if a business broker lacks a professional network, it says much about how they conduct their business.
Don’t hire your friend or relative
While it might sound convenient to have a friend or relative who’s a business broker, there are some scenarios where you won’t agree with what they are doing, but you won’t say it because it will look awkward. So, if you think that hiring a friend or relative will allow you to enjoy some perks, then you are wrong.
There’s one business rule that will never change—make the maximum profit. Besides, if the broker fails to negotiate as expected with the interested buyers, they might not have the courage to tell you the truth.
Don’t forget to ask for references and reviews
Any reputable business broker should have an authentic list of previous clients and their reviews. So, to get an idea of how the broker works, ask them for a link where you can check their online reviews. Also, ask them for previous clients who you can talk to, and ask any relevant questions about the business broker.
If the business broker has a few references or they don’t have any reviews, move on to the next broker. Typically, this is a red flag that you shouldn’t ignore, as hiring such a broker doesn’t guarantee expert work.
Don’t hire the first broker that you come across
Failing to do proper research when looking for a business broker, and going for the first broker you meet is something you shouldn’t do. The rule is, visit several renowned brokers first, get their offers, understand the commission they charge and how they do it, and then check their experience and track record. Now, once you gather this important information, compare all the business brokers, and choose the one you believe will guide your business to a successful sale.
When hiring a business broker, there’s a chance that your relationship will be a long one. Typically, it takes an average of 9 – 12 months to sell a business—this is from the time you contact the broker to the time the deal closes.
And, while it’s very common for brokers to request their clients to sign a contract for the entire period, that’s not the best thing to do. The best thing to do is to negotiate for a 90-day contract with the broker, which can be renewed upon expiry. 90 days are enough to give you a hint on the broker’s performance. Besides, it’s a reasonable time for the broker to perform. And, if the broker isn’t impressing you from the word go, there’s a chance that they will do that later.