Using Business Brokers to Sell a Business
Exclusive Listing Agreement for Selling a Business
Brokers are an important part of a successful business sale. But before giving exclusivity to a business broker, make sure to ask these important questions.
Never underestimate the value of a good business broker.
The best brokers provide services that go far beyond a simple business listing. They help locate capable buyers, maintain confidentiality, perform appraisals, guide negotiations, and perform a variety of other functions that lead to a successful sale outcome.
But not every broker has the skills or background that is required to see your sale through to its completion. Some brokers simply aren't capable of delivering on their promises, while others may not be right for your industry or business model. Since brokers often require an exclusive listing agreement from sellers, you need answers to several questions before you sign on the dotted line.
- What are your qualifications? You can't afford to invest time and energy in unqualified business brokers. Although there are many highly skilled and professional brokers capable of selling your company, there are many pretenders, too. Look for brokers with CBI (Certified Business Intermediary) credentials and other qualifications.
- What is your marketing plan for my business? A good broker should have an aggressive marketing plan that takes into consideration your need for confidentiality and discretion. You should expect your broker to contact you for approval before disclosing any information about your company or even its for-sale status.
- Do you work with other business sales professionals? It's beneficial to look for brokers who are well-connected with other brokers and third-party professionals (e.g. accountants, attorney, and appraisers) who will be important throughout the sale process.
- How much do you think my business is worth? This is somewhat of a trick question. Prospective brokers should be capable of giving you a general sense of your company's worth. But it's impossible to accurately set an asking price until the business has been subjected to a professional valuation process. If a broker offers a suggested asking price at your first meeting, he's a pretender - not a pro.
- Can you describe the sale process? Good brokers maintain clear channels of communication with their sellers. Your broker's description of the sales process should include consistent communication vehicles and invitations to be involved in the process.
- Do you have any references? Always verify the references of prospective brokers before you sign a brokerage agreement. If possible, obtain the contact information for both successful and unsuccessful selling relationships.
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