Sarasota Consultant | Pinellas County Value my Business
As part two to our discussion about choosing a business broker, you first should decide not to sell your business on your own. There are many legal and financial pitfalls when attempting to market a commercial business, and you should not go it on your own. Now that you have decided to use a business broker, you need to find one who will work on your behalf to get you a proper buyer and the right price. Here are some more questions to ask a prospective broker before signing a sales contract with them.
- How do you value my business? — Determining the market value of a business is not the time for set formulas and writing numbers on a napkin. Your broker should have the experience and tools necessary for setting a value of your business in the marketplace. You also need a broker who understands the difference between an on-line business and a brick-and-mortar business such as retail or an industrial operation. Discuss this carefully with any prospective broker to determine their knowledge of business valuation.
- How does the broker keep my business sale confidential? — Selling your business is not a time for the local business community to find out all about it. You don’t want your customers to know you are thinking about selling, as they might become concerned about the viability of your business when you simply are ready to retire or pursue another opportunity. You also don’t want your competition to take advantage of any rumors of your sale, or prospective buyers to reduce their offers thinking you have an urgency to sell. There are a lot of reasons why business sales should be confidential, and you need to understand how your broker protects your interests during all phases of the sale. The broker should be able to create interest in your business and qualify prospective buyers before disclosing the specifics of your business. Find out what your prospective broker does to protect your confidentiality.
- How many prospective buyers does the broker have at any time? — A broker claiming to have hundreds of prospective clients may not be your best choice. No broker has time to manage an excessive number of prospects, qualify them, and determine they are a fit for your business sale. Their prospect list may only be an email list, and they won’t have personal relationships with many of them. Look for brokers who have one to two dozen solid prospects, as they are more likely to have a qualified buyer for you.
- Will the broker sell your business at a value you set for them? — If a prospective broker agrees to sell your business for a price you provide, they are not looking after your best interests. You may have an overestimated value of the business in your mind or a lack of knowledge of current market conditions. A good broker should be willing to discuss these issues with you and try to reach a more realistic sales price based on knowledge and research, not your emotions.
- Ask the broker if they prepare contracts and whether you need an attorney — Experienced brokers should be able to assist you with preparing sales contracts and structuring the contract for your benefit. That being said, a red flag should go up if a broker tells you not to retain an independent attorney. You should have a separate party review all contracts when you are buying or selling a business because it’s your investment that needs protecting. A broker who is not willing to let others review their contracts may be hiding something. Find another broker.
Hallmark Business Brokers has your interests when you come to us to sell or purchase a commercial business. We will work hard to get you the best value for your business or find you a business you wish to purchase. We work professionally and confidentially, so contact Hallmark Business Brokers today to start the process.