When selling a business, it’s generally in your best interest to hire a business broker. The benefit of hiring a business broker is that you have the time to focus on improving your business’s appeal to potential investors while they handle all the tedious tasks involved in the sale.
This is a lot to entrust to someone else, especially since it’s your business on the line here. For that reason, you want to make sure that you hire the right business broker to sell your business. Here are some questions to help you.
1. How many transactions do you close a year?
One of the things we suggest you enquire about is how many transactions your prospective broker generally closes within a year. Depending on its size, the sale of a business can take anywhere from two months to two years. All experienced business brokers should have an average transaction turnaround depending on the businesses they specialise in.
Asking this question will reveal two things to you. Firstly, it will reveal to you whether they are more inclined to rush sales or have a good work ethic that could result in transactions taking slightly longer due to them being more thorough.
Secondly, if their transactions are excessively long, it might mean that their resources are spread too thin and that they have a lot of other clients with whom they have to share their attention. This isn’t necessarily a red flag, but it may mean that they cannot fully devote themselves to the sale of your business, which could result in sub-par services. Ideally, if you could find a broker who closes more transactions than the average broker, then you may have a good fit.
2. What are your certifications, and can you do business valuations?
Next, you want to check that the business broker you’re consulting is qualified to sell your business. Because of this question’s nature, be careful how you ask it. You don’t want it to come across as rude. These days, some people can become a brokers by simply doing a short course online. However, this means they may lack the formal training that other qualified brokers have.
Also, ask them if they can do a valuation of your business. Qualified brokers with a certification to evaluate your business will help you shoot two birds with one stone. If you’re looking for a broker who can do valuations, consider contacting a qualified business broker in Melbourne.
3. How long have you been a business broker?
Ask them how long they’ve been in the industry as a business broker. The business industry has evolved over the decades, but certain principles remain unchanged. Brokers who’ve been in the game for a long time have had the time to build up good connections and the skills to identify promising opportunities in the market. In this case, you should want a business broker with the qualifications and experience in the industry to sell your business.
4. Have you worked with a business like mine before?
Have they ever worked with a business like yours before? While selling a business often involves a similar procedure regardless of industry or type, having a broker who’s familiar with your type of business is helpful.
When you sell your business, you may need to change a few things to ensure it’s more appealing to investors. Likewise, placing your business in front of the right audience can significantly increase your chances of getting a better sale. Business brokers with specialised experience in certain industries can offer you the advice you need to improve your business’s appeal and market it to the right buyers. If they have had experience with businesses like yours, this is a good sign for your sale.
5. How does your fee structure work?
You also need to make sure that you understand how their fee structure works before you sign an engagement agreement with a business broker. It’s unpleasant to receive an unexpected bill after your business sale with a figure you weren’t expecting to pay. Ask the potential brokers how their fee structure works.
Some business brokers may charge an upfront fee to ensure they get some compensation in case you change your mind regarding the sale a month in. At the same time, other brokers would typically take a percentage of the final price the business sold for.
Final Thoughts
Hiring a business broker is a subjective process. While you may find multiple reputable brokers, you need that one who simply just fits. Asking them these important questions will help you sift through the different brokers so you know who they are. It will also provide valuable information that should help you choose the right business broker for the sale of your business.
Also Read: Exploring Industry Trends and Insights: How Expert Guidance Can Enhance Business Decisions
