Unless a business broker has “walked in your shoes,” he can never fully understand what a seller will go through emotionally or psychologically. While there may be successful business brokers who have never sat in an owner’s chair, prior ownership experience adds an important element that can make a difference. Hiring the right business broker makes you understand how to best utilize these key elements:
Understand cash flow — A business broker must be able to analyze financial statements, determine cash flow, and help set a sales price.
Deal Structure — A good business broker should explain and present choices of structure such as cash, owner financing, conventional financing, SBA, or a combination. Deal structure can be the difference between success, failure, gain, or average profit in selling.
Marketing plan — The marketing package should be coherent, and easy to understand. Ask how the broker plans to reach the most qualified buyers.
Buyer profiling — A good broker will do more than just present buyers; he will find qualified buyers who fit financially and can make a decision to move forward quickly.
Confidentiality — The issue of confidentiality should be a topic in your initial discussions with a broker. He should explain why it is important and specifically how he intends to handle the issue. Determine at what point the broker obtains a buyer’s financial statements and credit report.
References — A good broker is discreet with any information he obtains from the seller and has a prospective buyer sign a non-disclosure agreement. A buyer worthy of the trust both buyers and sellers place in him will not share information or references about businesses he has sold in the past.
Deciding on a Broker — You want a business broker who is responsive, able to answer questions, produces buyers, arranges meetings pushes for an offer, and is passionate about serving you. You want someone who has the ability to make a good match and develop a deal that is good for both the buyer and the seller, not someone who is just trying to make a deal regardless of whether or not it is good for the buyer and seller.
When choosing a business broker to handle the sale of your business, think about hiring one who has owned, run, and sold his own business like Chad Peterson. Hiring the right business broker not only makes the entire process tension-free but also helps you to get the best deal.