Whether you are planning to buy a business or sell your own, you’ll want the expertise and assistance of a qualified business broker. If you’re thinking about what to look for in a business broker, this guideline sheet will help point you in the right direction.
We’ll explain how to determine if you need a business broker or a mergers and acquisitions advisor, what traits to look for in a business broker, and what questions to ask a potential broker during your first meeting.
Broker or M&A Advisor
When attempting to buy or sell a business, you’ll be searching for a business broker or an M&A advisor to help you. The easiest way to understand the difference between the two is the scope and size of the transaction.
For instance, a business broker is your solution if you want to buy or sell a locally-owned business. An M&A advisor assists with more complex transactions that involve multiple companies, assets, and sales that total over two million dollars, and more than one location. For the purposes of this piece, we’ll focus on how to select a business broker.
Four Important Traits for Business Brokers
Selecting the right business broker should be a decision based on how well the broker understands your transactional needs, their ability to offer the services you want for the price you can afford, and how well they can market your business.
1. Experience
Learning about the experience of a business broker is vital. If a potential broker has only represented buyers in transactions and you are selling a business, you may want to keep looking for a better fit.
Additionally, a broker who has little to no experience with the scope of your transaction in terms of financial transfer, regulatory compliance, and tax transfers may not be able to offer the assistance you need.
2. Marketing Skills
An effective business broker has a vast network of connections that are useful when selling or buying a business. Networking will be key in how a broker markets your business. Understand the strategies that your potential broker uses to market your business, and learn about affiliations or associates they may bring on to help with your particular transaction.
3. Track Record
Your broker should be able to provide you with information about previous transactions they’ve handled. If they are hesitant to provide you with information about previous sales, it could be a red flag. A successful broker will be able to give you information about the types of business sales they’ve handled to ensure you are confident in their abilities.
4. Relationship
During the course of buying or selling a business, you’ll be working closely with your business broker. It’s important that you are comfortable with the broker and that you get along with them. If a personality does not seem to fit with yours, there are other brokers available.
Once you’ve decided on a brokerage firm, schedule a meeting to discuss your potential business relationship.
Questions to Ask During Your First Meeting
Here are four questions to ask during the first meeting with a potential business broker.
1. What valuation methods do you use?
Whether you are buying or selling, find out how your broker determines the value of the business in question. Valuation methods can vary and may include earning potential and current market value.
2. What marketing strategies do you utilize?
If you’re selling your business, you’ll want to know how the broker intends to market and advertise your business to potential buyers. Will these strategies reach your target audience? Is your broker going to use social media, direct mail, content marketing, or another form?
3. How much will the broker services cost?
Find out how much the broker’s service estimates are and when they will collect their fee. Know what services are included in the fees, and make sure you have everything in writing.
4. Do you have references?
A broker with a good reputation will have references, so ask for them and feel comfortable contacting these references. Contacting a reference will help you get a clear picture of what it will look like to work with that particular broker. See if they have reviews or testimonials online, like as part of their Google Business Profile, including statistics on their site (like the number of deals closed).
The Broker You Need
Before you search “how to sell my business in Houston,” consider the above traits and keep them in mind as you search for the firm that will best be able to help you. There are numerous brokerage firms available, and devoting time to finding the right match will pay dividends in your entire sales process.
Sources:
Key Differences Between M&A Advisors and Business Brokers | Investopedia