Use these 17 tips prior to engaging a business broker and you could save time, money and the possible disruption to your business. I constantly come across business sellers who have been given the complete “run around” by the “shonky business broker” who really has no intention (or clue on how) to sell a business and they tarnish the industry for the rest. The stories I come across include; “I can’t get hold of the broker or the company”, “I paid them considerable amount of marketing money”, “I have received no feedback or communication”, “I have signed up exclusively, I think, but I didn’t receive a copy of the signed agreement”, I am paying $x per week or $x per month ongoing through my listing’… and so on…… Before you sign up your business for sale and engage a broker use this 17 tip questionnaire, and inform the broker you would like to treat your meeting like a “job interview”, whereby you are interviewing the broker for the position of acting as your broker to sell your business. THE ESSENTIAL TIPS:- before engaging a business broker
- Check if the business broker is licensed in your state
- Ask to view their personal license.
- Cross check the license number with the office of fair trading in your state.
- Where is the brokerage companies head office based?
- Is the company an accredited Real Estate Agency?
- How long has this brokerage company been in business?
- What type of licenses does the company hold and which states?
- Ask for the principals details and ask to speak or meet with them.
- Ask if you can come to their head office to be shown around on how they operate.
- Is the broker a specialist?, if so, what area do they specialise in and how long have they been doing that?
- What have they sold that is similar to your business?
- Ask them to explain their methodology to you (or preferably your accountant) on how they came up with the price.
- What level of service is to be expected from the broker?
- How often can I expect communication?
- Will you be the same broker throughout the entire sales process?
- Can you run through the entire process from start to finish?
- I would like to discuss my options to list my business with my solicitor first, do you mind if I do this?
Unfortunately there are many “so called” business brokers operating in the market who are not licensed , and who are only interested in making a living from taking “marketing” funds from business owners – and those business owners never see that “broker” again. Be careful to avoid these people. Please take time to check the “bona-fides” of your broker. In almost every single business sale the buyer will complete a “due diligence” to verify such things as the profit, sales, staffing, wages paid, rent, working capital, assets and so on. It is no different for a business Seller. Do your due diligence on a business broker and the company that will represent you. If you treat these tips as if you were conducting a “due diligence” by taking your time and asking questions and verifying information, you can save yourself time, money, minimal disruption to your business. – and avoid the disappointment that we encounter every day. I was recently asked this question from the REIQ head office Brisbane… “Ian, What do you think makes a great Business Broker?” this was my response… Besides a strong reputation. Knowledge within the industry, strong communication skills, “follow through” and attention to detail. I have been a professional business broker for over 10 years and I am still learning and don’t know everything. Things change constantly i.e. documentation, laws, licenses, contracts, legislation, acts, codes of conduct and much more. The whole “how to” approach to become a recognised specialist/ professional. The biggest compliment a broker can achieve is a “referral”. Also get educated within this industry and your specific sector of real estate, to become the professional the general public expect you to be.
I really hope this helps you with your next decision to list and sell your business.
