If you’re planning to sell your company, you have two choices. You can do it yourself, or you can partner with a skilled business broker. While a DIY approach is certainly possible, you’ll be hard pressed to find anyone who thinks it’s a good idea. DIY sales usually get a lower sale price, cause more hassle, and are more likely to sell. A third-party professional lends credibility to the transaction, and can help shepherd it along to a successful completion.
Nevertheless, every entrepreneur needs to be a discerning consumer of business brokerage services.Here are the questions you need to ask before you retain the services of a brokerage firm:
- Do you have experiences with businesses similar to mine? Every niche is different, and a wealth of experience is only as valuable as it is relevant. Seek out a broker who knows your industry,and verify their experience with references and follow-up questions.
- Is this your full-time gig? Brokers who take the industry seriously and who successfully sell lots of companies do the work full-time—not as a supplement to another job.
- What are you doing to protect everyone during the COVID-19 crisis? A business that has not made any meaningful changes, that is not requiring masks, or that is not switching to remote meetings to the greatest possible extent does not care about the safety of its customers or employees, and may put you in a dangerous position.
- What strategies do you use to value a company? There’s no one size fits all valuation approach,so an immediate single equation is a bad sign. Instead, the broker should discuss the factors they weigh when deciding how to value a business, then give you details about how they would sell your business.
- How will you keep the sale of my business confidential? If news of the sale leaks too early, it could cause you to lose clients, suppliers, and employees. The right broker knows how to balance marketing with confidentiality.
- Which strategies do you use to create a competitive bidding environment? How many buyers do you have in mind for my business? How do you reach out to buyers?
- How many listings are you working on right now? You want to know that the broker is successful enough to have a few other clients, but not so overloaded that they won’t have time for you—or that they’ll offload you to a junior associate.
- What factors do you think drive value in my business? A good broker is honest about value,knows how you might increase value, and can correctly price your company.
- What factors do you think drive value in my business? A good broker is honest about value,knows how you might increase value, and can correctly price your company.
