17 Points To Consider Before You Engage A Business Broker

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

  1. Check if the business broker is licensed in your state
  2. Ask to view their personal license.
  3. Cross check the license number with the office of fair trading in your state.
  4. Where is the brokerage companies head office based?
  5. Is the company an accredited Real Estate Agency?
  6. How long has this brokerage company been in business?
  7. What type of licenses does the company hold and which states?
  8. Ask for the principals details and ask to speak or meet with them.
  9. Ask if you can come to their head office to be shown around on how they operate.
  10. Is the broker a specialist?, if so, what area do they specialise in and how long have they been doing that?
  11. What have they sold that is similar to your business?
  12. Ask them to explain their methodology to you (or preferably your accountant) on how they came up with the price.
  13. What level of service is to be expected from the broker?
  14. How often can I expect communication?
  15. Will you be the same broker throughout the entire sales process?
  16. Can you run through the entire process from start to finish?
  17. 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.  

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