Choosing The Right Business Broker
A business broker is similar to a Realtor but specifically for businesses. Most states require business brokers to have a real estate license, and most brokers become licensed Realtors so they can write leases and sell property for their clients. Florida is one of the states that requires all business brokers to be licensed Realtors.
So, you may be asking yourself, how do I know I found a good business broker? There are several qualities to look for when hiring the right business broker for you.
- Relatable- you should always choose someone you feel comfortable working with.
- Experience- choose a broker who has experience under their belt. Especially in buying or selling a business in your vertical. They will understand all the intricacies involved in either buying or selling your business and will have experience in dealing with similar roadblocks during the transaction.
- Business Owner- this is not a common trait, but if you can find a business broker who has owned a successful business. This means they understand all aspects of not only running a business but can provide valuable recommendations to help you either make the right decision on the purchase of a new business or assist you in formulating the right plan to sell your business.
Now that you have an idea of some of the qualities to look for in a business broker. Below are some interviewing questions you should ask your broker prior to hiring.
Questions to Ask your Business Broker Prior to Hiring
- How many businesses like mine have you sold?
A seasoned business broker will have prior experience selling a business similar to yours. Also, due to their prior experience, they may have already built a backend network of investors and contacts that they can lean on. Working with brokers that have business vertical experience means that they know what works for your industry and what does not.
- Is this your part-time job, or full-time job?
When you hire a business broker you want to know they are working on your behalf and not just some of the time. Always hire someone where this is their full-time job. This means 2 things (they will give your transaction their full attention and they will have resources behind them to make sure they have your best interests in mind).
- How do you value a business like mine?
Every business is different. This question will provide you with a good idea of their experience. If they respond with a cookie-cutter answer like “net income x 2” without asking detailed questions you should continue to shop around. This is a common question; however, this is a complex topic that needs to be properly analyzed for a true evaluation.
- How do you keep the sale of my business confidential from my competitors, customers, and employees?
Confidentiality is a BIG DEAL. Your business broker should go into detail regarding the policies and procedures in place to protect your anonymity. If customers and employees find out they may think you are going out of business. If your competition finds out they may start rumors about your business. An experienced business broker should be able to stir up plenty of interest without divulging any identifying business details. Not until a qualified buyer is on the hook, and a non-disclosure agreement is signed will business details be released to the potential buyer.
- How many qualified buyers do you have relationships with?
Brokers throwing out a large number is not always a good thing. It is virtually impossible to qualify that many buyers. Rather look for someone who knows your industry and has a dozen to two dozen prospects they have a solid relationship with. This is much more valuable than a broker sending out a mass email to a generic email list. Look for quality, not quantity.
- Can you value my business at $1,000,000?
Business brokers work on commission. A quality business broker will come up with a realistic valuation taking many factors into consideration. They will not value a business based on the owner’s perception of the business’s value. This will waste both the business owners and the broker’s time.
- How many listings are you currently managing?
A business broker that has dozens of listings is taking the approach that if they throw enough against the wall something will stick. This will virtually guarantee that your business will not receive the attention it deserves. Most successful business brokers will have between 3-7 listings that they manage. This ensures they can properly give each business the time they deserve.
- Do you handle the contract preparation?
An experienced business broker will handle the drafting of legal agreements. They will also be able to come up with different ways to structure the deal. However, you should always have legal representation to review all documents prior to signing.
Experience, Efficiency, and Success
Anthony Hicks is a Jacksonville business broker with years of experience. As a successful business owner, Anthony understands the sacrifice it takes to run a business. He is also committed to making sure that he is always working in your best interest. If you are thinking of selling your business, or are looking to invest in a new business call Anthony today for your free confidential consultation (904) 994-5235.
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