Using Business Brokers to Sell a Business
Is Your Business Broker Qualified To Sell Your Business?
Like business owners, business brokers run the gamut from the fully qualified to the barely capable. Here's how to tell if your business broker is really qualified to sell your business.
You have worked hard to make your business what it is today.
Over the years, you have strived to make sound decisions regarding the people you trusted to help you achieve your goals and objectives. Now that it's time to sell your business, why would you settle for anything less when it comes to the broker you will rely on to guide you through the sale of your company?
It's essential to invest time and effort in locating the broker who is most qualified to represent your business to prospective buyers. It's an unfortunate fact that some brokers make big promises, but lack the qualifications and credentials to deliver tangible results.
The process of qualifying brokers is similar to the process for vetting any other professional consultant, with a few important differences. Business brokerage is a specialized brokerage field, so your broker should be steeped in the nuances of selling similarly sized businesses in your industry. Beyond that, here are some of the other qualifications to look for in a first-rate business broker.
- CBI credentials. Qualified business brokers possess CBI (Certified Business Intermediary) credentials. A CBI broker has been formally approved by IBBA (International Business Brokers Association) as having the training, experience, competencies, and ethics necessary to perform professional brokerage for their clients. Applicants must pass a comprehensive exam and meet educational requirements before they can receive CBI credentials.
- IBBA membership. IBBA is the trade association for business brokers. Current IBBA membership is a significant advantage for sellers because IBBA brokers have exclusive access to brokerage resources and business connections. A broker who isn't an IBBA member may be handicapped in his efforts to sell your company for the best possible terms and price.
- Check with BBB for complaints. The Better Business Bureau is a central depository for B2B complaints, including owner complaints against business brokers. Although a single complaint may not be representative of the broker's service and abilities, a history of complaints creates a trend you can't ignore.
- Length of time in business. In business brokerage, more experience translates into more relationships and industry connections. A new broker may be willing to accept a slightly lower commission, but his inexperience may cost you when it comes to the quality of buyers he can attract to your sale.
- Track record. There are many legitimate reasons why a good broker may not be able to sell a specific business, including the possibility that the seller had unrealistic expectations for the sale. But in general, you'll want to focus your search on brokers with a track record of successful sales in your industry and geographic region.
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