Choosing the right Business Broker

 October 2019, David Screaigh and Catherine Jones

When it comes to selling a business there are pros and cons to choosing the right Business Broker, or even considering DIY.  Choosing to DIY means you will by necessity take your focus off running the business, missing out on important marketing methods and other aspects of the sale process not being handled correctly/efficiently - which means the sale price and structure may not be maximised - and worse still, the sale does not proceed due to some unknown factors arising during documentation, due diligence and the settlement process. Not all Business Brokers are created equal and their input is critical to the outcome. It is no different to undertaking a complex medical procedure/operation and not knowing who your doctor is! It’s worth conducting your own research and due diligence before appointing a Business Broker, including asking your business networks for recommendations.

When talking with a Business Broker, ask for a specific plan that they will action to market the business, solicit buyers and achieve visibility. This to be balanced with the confidential nature of selling a business. If their strategy is simply to write an online advertisement, then this (although important) will not be capturing the full market for you. Achieve some understanding of what their Information Memorandum/Business Profile contains and how they prepare it, as it is an extremely important part of the sales process. Do they prepare it personally (best) or is it outsourced to someone in the office or even overseas! Ask the Broker for some testimonials of sellers with whom they have worked. Seek permission to talk with a few of them if you want - which should be no problem at all. If a past seller will give you a positive review of a Business Broker, it speaks volumes about the Broker's ability, experience, methods and ethics.

Avoid a ‘churn and burn’ Broker who may push you to sign up for a Listing without them conducting a full appraisal process. Instead, expect to be asked a lot of questions about the business you are selling, which demonstrates an effort to get an understanding of your business. Every business is different, even if in the same industry, so a Broker whose primary agenda is to learn about your business, will be well equipped to sell it. You want them to honestly express whether or not they feel your business can be sold, what price, the likely time frame and the type of buyers who might be attracted to acquiring the business.

Using an experienced Business Broker can make the sales process and transaction flow better and ease communication – because you have someone else in your corner to help, advise and coordinate everything. When selling a business, it is very important to know what to do, when to do it and how to do it (and also what not to do) – which is different every time. A successful sale requires the buyer to be comfortable enough to make an offer, so they need all their questions answered and fears covered off. The more confidence and trust you can build with the buyer, the greater the chances of making the sale. The Business Broker helps build this trust and credibility and should involve you in important communications. At the end of the day, the aim is to find the right buyer with the right circumstances/strategy and then work with them to obtain a mutually beneficial outcome. Selling a business is a team effort and embraces a win win approach for both the buyer and the seller.

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