When you want to sell your business, you’ll have two options—to hire a business broker or to sell the business yourself. This also applies to anyone who wants to buy a business. While it’s still to buy or sell a business without the assistance of a business broker, letting a business broker handle everything guarantees a faster sale or purchase, as well as the best deal.
Unlike a business owner, business brokers are experts, with years of experience in selling or purchasing businesses. Seasoned business brokers can identify the best opportunities for a seller or a buyer. Besides, they understand the ins and outs of the industry—and this makes them a valuable asset when it comes to handling the purchase or sale process of a business.
When you hire a business broker, they will take some tasks like advertising, prospect interviews, business valuation, due diligence, and other essential activities off your back. This will in turn allow you to concentrate on your business, as you wait for the final moment to sign the deal.
In this post, we shall discuss the most essential things to consider when hiring a business broker.
Experience
The business broker’s experience will greatly determine the closing deal that you will get. Thus, it’s essential to check for how long the business broker has been working. Checking the broker’s experience will assist you to differentiate business brokers who have been getting the best deals for their clients from those who cannot.
It’s not that business brokers who cannot get the best possible deals are not good—it’s that business brokers who have gotten the best deals for their clients before can get a good deal for you. Don’t gamble your business with an inexperienced business broker.
Selling history
In addition to the broker’s experience, you also need to check their selling history. Yes, the business broker might be experienced—but not in your local market or specific industry. No two markets and industries are similar. So, unless the business broker understands what buyers of a certain industry want, there’s a high possibility that they will not find the best buyer for your business.
It’s always a good idea to determine how many businesses in your industry or market the broker has sold in the past 1 – 2 years. Now, take your time to compare these statistics across all the brokers you have approached. If the broker doesn’t have a good history, think twice before hiring them—there’s a high possibility the business broker will not meet your expectations.
Basic financial and legal awareness
While it’s not a must for a business broker to be a financial analyst or lawyer, they should at least have some basic knowledge of financial and legal issues. The process of selling or buying a business includes understanding and dealing with certain legal and financial issues. Therefore, a seasoned business broker should have easy access to professionals with good financial and legal knowledge.
Marketing skills
Failing to consider the marketing skills of a business broker is a costly mistake—but most people still make it. Always go for a business broker with the best marketing skills. This is an essential characteristic in today’s world, as a business broker with these skills can present your business in a good manner. Besides, the business broker can reach a larger market segment, and this can increase the chances of finding the desired buyer. Also, if you want to buy a business, the business broker can utilize different social media platforms to find prospective businesses.
Online reviews
You check the online reviews of a business broker or their company by doing a quick Google search. To do this, just type “city + business broker.” Now, as you scroll through the search results, you should find the business broker’s reviews. In case the business broker you want to hire has been in the game for years, ensure they have a substantial number of positive reviews.
Training and certifications
Certifications are essential since most business brokers do not have formal training or certifications to conduct business appraisals or valuations. Yes, the business broker might have taken some online classes or weekend training, or knows the local market—thanks to their experience.
However, if the Orlando Business Broker has formal training and certifications to conduct business valuations and appraisals, you have found the right person. The best way to do this is to ask the business broker if they are trained and certified by the relevant organizations in your local area.
The valuation methods used by the business broker
It’s always recommended that you ask your business broker to conduct a pilot valuation before signing an agreement. However, you must understand and accept the broker’s valuation methods if you want to understand their valuation. Therefore, you should ask the broker to explain how they arrived at the current value, as the methods they have used to come up with the listing price.
Any experienced broker understands that under-valuing a business to close the deal fast is bad for business. However, the price must not be too high, as this can drag the selling process for years. Thus, good business brokers know how to strike a balance when valuing a business.
