Selling your company is a big deal and it’s important to find the best business broker to help you achieve a sale. But how do you know that you’ve found the right broker for your needs?
Five Things You Need to Know Before Selecting a Business Broker
1. What is a business broker?
Business brokers work with business owners to facilitate the sale of their company. They work with a full range of business types – sole proprietorships, partnerships, PLCs, and limited liability companies. And there are different brokers for different business requirements. Business transfer agents (BTA), for example, generally specialise in helping smaller businesses. Whereas corporate finance firms (CF) typically deal with the middle market – enterprises valuing £5m or above. And commercial real estate agents (CRE) help businesses dispose of their premises, should they not wish to sell their company as a going concern.
2. How do business brokers work?
Every broker has their own approach to doing business. Usually, their sales rate comes down to how proactive they are in their approach to finding buyers. And how realistic their pricing is. Because although, as a business owner, you want the highest price possible for your company, it’s important to remember that an over-priced business never sells. Equally though, you don’t want to give your business away. So, you need to find a broker that can find that perfect, realistic, middle ground. And then put in the legwork to facilitate the sale.
3. Research and ask questions
Treat your initial contact with your broker as an interview, and have a raft of questions ready to go. Not just about fees. But about how the business valuation will be made, and who by. Whether you will have a dedicated account handler. What happens if a sale is not made? What happens next – and at every stage of the sales process – if you agree to take them on. And have they worked with any other businesses like yours in the past? What was their success rate?
4. Be aware of the small print when considering fees
Business brokers tend to fall under two different structures when it comes to fees. You can pay a retainer or you can work on a no-sale, no-fee basis. Whatever the agreement structure it’s important to understand all aspects of the deal before agreeing to proceed. At Ventura Business Brokers, we operate predominately on the basis of a ‘success fee’ and this will normally be based on the price achieved. In some circumstances, a modest initial fee may be payable but this will depend upon the amount of preparatory work and desk research we need to undertake prior to marketing.
5. Success is never guaranteed
Even the very best brokers in the business will not be able to sell all the companies they take on. That’s often because the business is working with the wrong type of broker for their needs or partly because the business isn’t in a saleable condition. So, before taking on a broker, it’s a good idea to make sure your house in order. This article should help in that respect.
Finding the right business broker for your needs has the potential to significantly simplify the sale of your business. But the emphasis in that sentence is on ‘right’. So, take your time. Do research. Ask questions. You’ll be glad you did when you complete your sale at the best possible value.
Are you looking for a reliable business broker to work with? Get in touch to find out what Ventura Business Brokers can do for you.