Four Keys for Picking a Good Business Broker
How do you find a good business broker? These days, even a recommendation from a friend isn’t enough to trust a business broker with your future. If you plan on working with a business broker, here are some important factors to consider.
1. Credentials
Obvious, right? But some people don’t. You MUST check out your business broker's credentials before signing him or her on to represent you. The best way to do this is by perusing their other listings and asking for references. You may also want to ask other local business brokers about their experiences with your business broker.
2. Experience
It's essential to make sure your business broker has experience in your specific industry. Either way, you are going to pay your broker 10-15% (standard rate) of the sale price. You'll rest a lot easier knowing that he/she has the industry-specific knowledge necessary to make the best possible deal on your behalf.
3. The Plan
A good broker will create a marketing or purchasing plan for your business. If you’re selling, the marketing plan will involve an advertising plan and information relevant to the sale of your business. If you’re buying, expect the purchasing plan to include information about comparable listings, recent sales, etc.
As the business owner or buyer, it isn't unreasonable for you to be involved in the development of the plan. But remember: You hired a business broker for a reason. It's okay to offer input, but you should also be willing to take your business broker’s advice.
4. Confidentiality
If you’re selling your business, you must keep your intention to sell as confidential as possible. If you don't, you’ll pay a huge price with your employees, customers and suppliers.
When it comes to confidentiality, your business broker is caught between a rock and a hard place. On one hand, his job is to make potential buyers aware that your business is for sale. On the other hand, he needs to keep that information limited to the right people. At some point, you need to have a conversation with your business broker about how you can maintain confidentiality as you market your business to potential buyers.
Source: International Business Brokers Association, Inc
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