Let’s say you’ve decided to sell your business and retire or take the chance on a new business. When it’s time to sell, you need to find the right buyer and get a good price and terms for your business. To have a chance of doing that, it’s imperative you find a good business broker to work with.
Business brokers understand buying and selling businesses, and they’ll work to connect you with the right buyer. This can help you get more for the business, make sure it sells, and help the business sell faster, so you can go ahead and move onto whatever is next. When you find a good business broker to work with, you’ll have someone on your side to help through the selling process.
Finding a good business broker, however, can be easier said than done. Yet, there are a few things you can do to make it easier to find a broker you can trust. Read below to learn more about how to find a good business broker and what to look for when you’re comparing the options available to you.
Ask Other Business Owners
You may not be ready to tell the world that the business is up for sale, but asking other business brokers can be helpful. If you’re thinking of trying a business in a new industry, you may ask around for advice on business brokers under the guise of purchasing an existing business. This way, the word doesn’t get out that the business is for sale until you’re ready to list it. No matter how you phrase the question, talking with other business owners gives you the chance to learn more about who they liked working with or, maybe more importantly, who they didn’t like working with. This way, you’ll know who to look into further or who you should avoid.
Research Experience and Credentials
Once you have a few business brokers in mind, it’s a good idea to research them thoroughly to learn more about their experience and credentials. Some of the things you should look for include the following.
- Truthfulness – Listen to what the broker says about what your business is worth. Does it seem like they’re saying what they think you want to hear, or does it seem like they’re being honest even if it might hurt to hear what they have to say? Always look for a broker who will be honest, so you can trust them throughout the process.
- Track Record of Sales – Get a list of previous clients for the broker and contact them to learn more about the broker. It’s possible to find out his personal style as well as any attributes that helped or hindered the sale for them.
- Experience in Your Industry – Make sure the broker is someone who specializes in selling businesses that are like yours. They should have experience in your industry as well as with businesses of the same size, in the same geographic area, and in the same price range.
- Connections With Other Professionals – A good business broker will have previously-established relationships with accountants, lawyers, and other local professionals who may be needed during the business sale. Even if you don’t use their recommendations, it’s important to know they have connections with professionals in the area.
- Credentials- In a sea of credentials, it’s tough to know which ones are meaningful. In general, many M&A investment bankers at the Wall St. or mid-market levels have MBA’s, usually from Ivy League or equivalent schools. CGK’s Managing Principal holds both an Ivy League MBA and the Chartered Financial Analyst (CFA) charter, which some portfolio managers or analysts on Wall St. may have. It’s considered a rigorous, three-level test, with a low pass rate. There are very few CFA’s helping small or medium-sized business owners sell their businesses. You might also see business brokers who hold business valuation credentials. While business brokers have numerous options for credentials, some are more rigorous and meaningful than others.
Look for IBBA Association
The IBBA (International Business Brokers Association) offers association to business brokers who are established entities. The IBBA offers education and best practices for business brokers. It is also a community of business brokers, which allows the brokers to bounce ideas off of one another and talk about any pertinent issues facing the community. It is a good idea to only work with a broker who has an association through the IBBA, as they have additional training and expertise. This can help them sell your business faster as well as bring you a higher profit from the sale. For larger deals, the IBBA also offers association with M&A Source, where the deals need to have a minimum selling price of at least $1 million and preferably, more. CGK Business Sales routinely works with companies that are worth multiple millions of dollars or tens of millions of dollars. For these types of deals, we consider ourselves “M&A Advisors” rather than business brokers, though we do both styles of deals. Larger deals tend to be more complex businesses with intricate financials and deal terms. We’ve done both.
Find a Full-Time Business Broker
Business brokers may not always work full-time as a broker. Some use this job to bring in extra money in their spare time or as a part-time job. While they may be able to handle the task of selling your business, it could take a lot longer if they aren’t focused on just their job as a broker. Consider a business broker who works part-time at a different job.
When they’re working on the other job, they aren’t returning phone calls, working with professionals on selling your business, or doing anything else to further the sale. If there’s a buyer lined up and ready to purchase, it could take a lot longer for this type of broker to complete the sale because they don’t have the time to dedicate to it and may need to schedule any meetings further out. Instead, always look for a full-time business broker, as they have the time and the ability to get the sale done faster and make sure the transaction is as profitable as possible for you.
Look Into Their Marketing Plan
Something that’s easy to overlook is the broker’s marketing plan. Marketing online can be a way to sell the business, but the plan should be more than just list the business for sale online. Instead, it’s better to choose a broker who has a more sophisticated strategy that’s designed to bring in as many potential buyers as possible. When there are more potential buyers interested in your business, you’re going to end up getting more money, better terms, and may be able to sell it faster. A more sophisticated marketing plan is the only way to get this to happen. CGK Business Sales has an enormous high-net worth buyer list, in addition to personal connections with private equity, venture capital, family offices, and strategic industry buyers in almost every industry.
Selling a business is a big deal, and you’ll want to make sure it’s done right. That’s why you need to take the time to find a good business broker who will help you through the whole process. To start, take a look at CGK and learn more about what helps them to stand out amongst other business brokers and why they might be the best option to help you sell a business.
