When it comes to selling a business, there are pros and cons to do-it-yourself (DIY) versus using a business broker.
Primarily, choosing to DIY means you will, by necessity, take your eyes off running the business.
If your business doesn’t sell quickly – or at all – you not only will have lost focus on running your business, you may miss out on important opportunities, especially those connected to keeping performance and profits healthy.
Not all business brokers are created equal. It’s worth conducting your own research and due diligence before appointing a business broker.
Ask your business networks and industry associations to recommend a business broker.
What’s the broker’s marketing strategy?
Ask for a detailed plan that a broker will action to advertise the business, solicit buyers and achieve visibility.
If their strategy is simply to write an online listing, then there is only limited added value and you might consider doing it yourself.
Request copies of profiles they have developed for other clients. Expect detailed pros and cons of the business profiled.
What have been their other sales successes and failures?
Ask the broker for the names of at least 10 sellers with whom they have worked and contact them.
If an owner will give you a positive review of a broker regardless of whether the business was sold or not, it speaks volumes about the broker's ability and ethics.
What do they ask in their first meeting with you?
A ‘churn and burn’ broker is the one who will pressure you to sign up for a listing in your first meeting.
Don’t fall for it. Lots of listings do not a great business broker make.
Instead, expect to be asked lots of questions about the business you are selling. You want a broker whose primary agenda is to learn about your business, because then he or she will be best equipped to sell it.
Asking you good questions in an effort to get to know the ins and outs of your business is a great sign, as is a willingness to invest time with you in follow-up meetings.
Also, they should be presenting questions to you that a buyer will ask.
You want them to honestly express whether or not they feel your business can be sold.
The value in an intermediary
Using a broker can make a deal flow better and ease communication – especially if you need to take a firm stance, because it means you have someone else in your corner to deliver any bad news.
However, too much intercession can work against you when negotiating a sale, so don’t be afraid to mix broker communications with DIY.
To get any buyer comfortable enough to make an offer, they need all their questions answered and will seek assurances that you will be there for an effective transition period.
The more confidence and trust you can instil in the buyer, the greater your chances of making the sale.
It’s hard to build this credibility through a third-party broker alone, so make sure you involve yourself in important communications.
Other questions and points to consider when deciding to DIY or retain a business broker
- How much are you willing to pay for the services of a business broker?
- Will you feel a lack control over the process if you are used to doing everything yourself?
- A broker may pressure you to accept a contract you're not happy with
- A broker may pressure you to accept a lower price so they can get their fee, which is usually a percentage of the sale price, rather than risking the deal falling through
- How many clients is the broker currently working with? Do they have time to properly represent your business?
- Find out how to negotiate successfully
Once you’ve decided whether to appoint a business broker or go it alone, it’s time to prepare your business for sale.