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What Is a Business Broker? How to Hire the Right One
If you’re asking yourself these questions, you’ve come to the right place. In this article, we tell you all you need to know on how to hire a business broker.
Hire a Business Broker
Here are 7 tips to best choose and hire the right business broker.
7 Tips for hiring a qualified business broker:
Rely on referrals and ads
Dedicated practitioner
Experience
Industry knowledge
Public reputation
Professional connections
Likable
The selling and buying of businesses in the United States are more common than you may have thought, with 10,312 businesses changing hands in 2018 alone.
The reasons people decide to buy or sell businesses are varied. It could be that changes occurred in your life in the last year or that you simply want to take a new direction this year. Whichever the reason, selling or purchasing a decision is among the biggest decisions you’ll ever make.
Whether the outcome of the transaction is a successful one depends on your business broker. But what is a business broker? More importantly, how can you hire the ideal business broker for you?
If you’re asking yourself these questions, you’ve come to the right place. In this article, we tell you all you need to know on how to hire a business broker.
Read on to learn more.
What Is a Business Broker?
A business broker refers to a trained individual or a professional agency whose role is to aid the sale or purchase of a business. Primarily, business brokers help their clients secure the best price for the business. They’re also responsible for submitting the appropriate paperwork and completing the needed permits or licensing.
As you’re going to find out, the whole process of transferring the ownership of a business can be lengthy and complicated. That’s why it helps to use a business broker, especially if you’re the seller.
A business broker can suggest a realistic price value for your business and properly advertise it for sale. They can also screen and interview potential buyers. A seasoned business broker will also help you in properly preparing your business for sale.
If you’re the one considering buying a business, a business broker can help evaluate the businesses you’re considering. They will also get the cash flow statements and financial statements of those businesses so you can make an informed decision.
A good business broker will also help you secure financing, besides holding negotiations with the seller on your behalf.
Tips for Hiring the Best Business Broker for You
Now that you know when to get a business broker and have seen what such a professional can do for you, it’s time to look at how you can get the best one for you. Read on for practical tips on finding a great business broker.
Rely on Referrals and Ads
One of the best ways to find a business broker is through referrals from trusted contacts. Your friends, relatives, or colleagues may be able to recommend a business broker they’ve worked within the past.
You can seek out brokers in the business sections of major newspapers. Narrow down on two or three suitable candidates and interview them.
Choose for a Dedicated Practitioner
During your interview, find out whether the business broker practices full-time or part-time. A dedicated practitioner can add a lot more value to the sales transaction as they’re likely to have a larger network of contacts.
Where you’re selling a company worth millions of dollars, it’s best to work with an acquisition or merger intermediaries.
Ask About Experience
Industry experience is a great asset in any profession. Inquire how many years your prospective business broker has been in the industry. Sure, everyone starts somewhere, but when you’re engaged in a transaction as sensitive as the sale or purchase of a business, you don’t want to work with a newbie.
But it’s not enough that the broker has been in the industry for years if they’ve only executed a handful of deals. Work with someone who has successfully helped a considerable number of business buyers and sellers seal deals.
Consider Industry Knowledge
Top business brokers will usually have worked with a variety of businesses. However, most successful brokers develop a liking for particular types of businesses or industries over time.
Don’t hesitate to ask what particular types of businesses your prospective business broker handles regularly. If you’re looking to buy a SaaS company, working with a broker with industry knowledge on such businesses can lead to a better outcome for you.
Assess Their Public Reputation
If someone recommended the broker to you, it’s a good indicator that you’re going to have a great experience working with the broker. But if you found the broker through an online search or newspaper search, it’s a smart move to learn more about their reputation.
So, how do you evaluate a broker’s reputation? The first place to start is online. Read online reviews to find out what people say about the broker.
You could also ask for a list of previous clients from the broker during your interview. Follow up with two or three of those clients to what they say about the broker. If past clients generally seem happy with a business broker’s services, it’s a good sign that you, too, will love working with them.
Inquire Whether They Have Connections
Besides the business broker, you’ll need other professionals to help you along this journey. These include accountants, attorneys, bankers, and others. Finding a business broker who has connections with such professionals means that you won’t have to spend time and resources finding them on your own.
Of course, not all great brokers network the same way. However, a broker without a professional network tells you a lot about how they do business.
Consider Likeability
You’re not looking for a spouse in your broker, but you’ll be working together for months. The transaction you’re undertaking together is an intense one and involves highly personal matters. That’s why you want to gauge from your initial meeting whether things are going well between the two of you.
If you and your broker do not seem to be getting along well during your interview, it could signal challenges on the road ahead. It’s best to move on to the next potential broker.
Find the Right Business Broker for You
Hopefully, we’ve aptly answered your question, “What is a business broker?” Given how significant this professional will be when you’re buying or selling a business, it’s critical that you hire the right one for you.
Are you interested in the services of a reliable business broker in your area? Get started today.
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BizNexus -Learn More From Our YouTube Playlist:
PREPARING TO EXIT YOUR COMPANY
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THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.
Top 3 questions to ask a business broker in 2019 to sell a business
Business owners often make huge mistakes by attempting to sell their business on their own when not prepared to do so. What’s worse? Choosing the wrong business broker to sell your business because you weren’t prepped to ask her the right questions. Here are our top three questions to ask a business broker before selling your business in 2019:
Business owners often make huge mistakes by attempting to sell their business on their own when not prepared to do so. What’s worse? Choosing the wrong business broker to sell your business because you weren’t prepped to ask her the right questions. Here are our top three questions to ask a business broker before selling your business in 2019:
1) How many businesses have you sold as a lead broker on the sale?
Resumes mean little, completed transactions mean everything. Get a list of completed transactions the broker has led in your industry, in your area, in your approximate deal size… everything.
2) Who is my potential target buyer?
Make sure the broker has a good plan for selling your business, and a reliable list of active buyers she plans to market the business too. Will she market individual buyers? Investment groups? Strategic competitors in your industry who might be actively looking for acquisitions?
3) Do you co-broker?
This is a big one business owners often miss when hiring a business broker. If a business broker will not agree to co-broker you might want to run for the proverbial hills as a potential seller looking to maximize interest and offers within a limited amount of time. A broker who refuses to co-broker (work with and share commission) with another professional representing a buyer who might be interested in your business is essentially limiting your selling opportunities in order to protect their own commission. We believe business brokers have a clear fiduciary responsibility to maximize interest, offers, and speed on behalf of their seller clients, to ensure the highest price and best terms for any business owner who has entrusted them to sell their business.
BizNexus -Learn More From Our YouTube Playlist:
BUSINESS ACQUISITION
Have you checked out our podcast?
THE BIZNEXUS ROUNDUP
Quick & dirty interviews, war stories & tips from the trenches of business acquisition, growth & sale. We aim for value, efficiency & fun, so you'll walk away with something useful to take with you along the journey of buying, growing & selling a business.