If you have decided to sell your business, hiring a business broker is the ideal way to maximize value. However, it’s vital to find the right business broker, so you may need to ask them several questions. So, what questions should you ask your potential business broker? Read more here.
What Is Your Valuation Process?
To determine how experienced a business broker is, you should ask how they conduct a business valuation. You might need to see another broker if they rely on generic approaches or provide vague answers.
Professional business brokers take into account many variables to determine the right asking price for a business. For example, the same formula for online consulting firms may not apply in retail due to their structural and organizational differences.
Do You Have Qualified Purchasers for Businesses Like Mine?
That is excellent if a business broker has a large pool of prospective buyers. However, you need to engage the services of a broker who specializes in selling businesses similar to yours or has qualified buyers within your industry.
How Do You Protect the Confidentiality of the Selling Process?
Protecting the confidentiality of your business sale is vital, so make sure to ask the broker about their confidentiality policies. If any information about your sale leaks out, it may prompt a mass exodus of key employees from your business, hurting the sales price. Moreover, your competitors could exploit the opportunity of gaining a competitive advantage.
How Many Years of Experience Do You Have?
Working with a business broker is an excellent option for business owners, yet not all brokers are equal. Many states don’t have any licensing requirements, so you should do diligence to fully understand how much experience and expertise a broker has in main street transactions. Similarly, it might be helpful to hear about the potential broker’s journey into business brokering.
How Long Will It Take to Sell My Business?
This is one of the trickiest questions, but a good one to ask. An experienced and reliable business broker will never commit to a duration because they cannot tell for sure. However, they should tell you how long it took to sell a similar business to yours of comparable size.
When interviewing your potential broker, it’s best to pay attention to how they communicate. Are they calling you back within a few hours or promptly answering your texts? If the buyer waits too long for your broker to get back to them, the buyer could have second thoughts. This is essential because once a qualified buyer shows interest, the deal must move along steadily and keep momentum.
What Is Your Commission and Fee Structure?
Most business brokers work on commissions, such as a small percentage of the selling price. Others might charge a retainer fee for services or work that goes above the scope of the project. This is not a bad sign if a business broker charges an upfront retainer. They, too, deal with business owners who test the waters, so an upfront retainer offers them a way to filter out owners who are not serious about selling.
Asking a business broker the right questions before bringing them on board is critical to success, so whatever your concerns, it’s best to always talk to them.