When you decide it’s time to sell your firm, you have two primary ways to achieve that goal. You may either use a company broker to manage the specifics of the deal or try to sell it on your own. While selling independently is conceivable, most owners lack the time, relationships, or perspective necessary to arrange a secure and equitable purchase.
The best course of action is frequently to use a third-party specialist, but only if the broker you select fully represents your interests. Choosing the incorrect broker might be the difference between selling for a price you’re happy with and not selling at all.
Want a trustworthy broker recommendation?
If you’re not sure who the go with then we can help out there. We haven’t had too much experience with business brokerships within Brisbane. But we have in the past explored brokering on the Sunshine Coast. And our recommendation for the best business brokers on the sunshine coast is BizBrokers. In our opinion, they tick all the boxes mentioned below. So if you’re looking for a broker to sell your business, check out BizBrokers.
Here are our top questions you need to ask before hiring a business broker:
How much expertise do you have in marketing companies similar to mine?
You should seek for a specialist that has previous experience selling a company similar to yours. Selling a website is very different than selling a restaurant. Not only is the company concept entirely different, but the target customer is also very different. Working with a business broker who already has ties to potential customers for your company and is knowledgeable about the nuances of that particular market is useful since successful business brokers will always have a number of knowledgeable buyers in their back pocket.
If you pick an agent who hasn’t previously sold a firm like yours, they’ll need to get intimately familiar with both your company and your sector. Don’t waste your time that could be spent on negotiations and prospecting.
Do you work in an office or from home?
Working from home is perfectly acceptable, and many businesses are converting to virtual environments to save money. However, for brokers, working from home may occasionally imply that this is not the person’s primary employment. Hiring a broker that won’t give your listing their entire attention because they have another job that takes up the bulk of their time is the last thing you want to do.
A business brokerage with an office usually has a full staff of brokers and professionals. This staff will all work together to sell your business quickly and for the highest possible price. They can conduct negotiations and meet with possible purchasers in a formal atmosphere provided by an office. The broker you select to work with is a direct reflection of your company.
Which venue would you want for potential purchasers to negotiate the purchase—a classy office or a coffee shop? When it comes time to seal a sale, having a professional appearance helps a lot.
How many similar firms have you sold?
It is crucial to learn how many companies similar to yours they have sold. This should not be confused with the type of company. There can be significant differences across establishments in the same category, such as restaurants. A 30-seat breakfast joint is very different from a 200-seat Italian fine-dining establishment with a full bar.
It is in your best advantage to keep exploring until you locate a brokerage that is skilled and competent to handle your listing if they haven’t previously sold a company like yours.
How would you evaluate a company?
You may determine a broker’s level of experience by asking them to describe how they appraise a business that is for sale. Before asking you many questions, if they offer you a canned response like “nett income times two,” turn around and flee. The same method only applies to some firms because there are so many variables to take into account in valuation estimates.
A website or online firm, for instance, is valued very differently than a brick-and-mortar retail store.
The majority of small businesses are valued based on a multiple of PEBITDA, which stands for Proprietors Earnings Before Interest, Taxation, Depreciation, and Amortization. PEBITDA is made up of the net profits of the company plus costs that are incurred for the benefit of the current owner(s) but not necessarily the company. Because business valuation is a complicated subject, you should avoid any brokers that propose a general value formula because every company is unique.
How will you stop my customers and rivals from learning that my company is for sale?
It’s crucial to maintain confidentiality regarding the selling of your company. Make careful to learn about the regulations that protect the privacy of the sale’s specifics. If your clients learn about the transaction, they could think it’s a problem when, in fact, you might be making the sale to look for additional prospects. Furthermore, you don’t want your rivals to learn that you are looking at selling.
A smart broker will be skilled at generating interest by only offering teaser details and selling the “opportunity” rather than the specifics of the transaction. Once a prospective buyer indicates interest, they must be qualified to make sure they have the resources to buy the company. Before disclosing any sensitive information, the broker should sign a non-disclosure agreement after being qualified.
How many potential customers do you have?
It could seem advantageous to work with a broker that has a vast clientele, but this isn’t always the case. In truth, it is doubtful that someone truly has tens of thousands of potential customers at their fingertips.
Building genuine connections and qualifying that many consumers would be extremely difficult. Anyone claiming to have tens of thousands of customers is probably using a generic email list and does not personally know the customers. You will value a broker far more as a seller if it specialises in selling companies much like yours and has established connections with a few dozen potential purchasers.
Could you please list my company for $1 million?
A competent broker knows how to develop a reasonable appraisal and price plan that will result in a sale. Keep in mind that they aren’t paid a fee until they sell your company, so it is in their best interest to price it fairly with the dual objectives of selling it and getting the greatest possible price.
You will be wasting your time if you provide an unreasonable quantity and they agree to your pricing requirement. Because they respect their time and won’t waste it on a firm that won’t sell, seasoned agents won’t waste their time on listings that aren’t priced right.
What number of listings do you currently have?
You may get a fair idea of how much time a broker can devote to selling your company by looking at how many listings they presently have. A broker who has a lot of listings could be taking on as many as they can in the hopes that promoting them all in a passive way would result in a sale. This method of “throwing things up against the wall and seeing what sticks” is ineffective.
If a business brokerage has more than twenty active listings per broker, your listing won’t get the attention it needs to sell. Look for one with between fifteen and twenty current listings per broker. They are aware of the time and care each listing demands, as seen by the limited, manageable quantity.
Do you offer assistance in creating sales contracts? Should I hire a lawyer?
A knowledgeable broker should be able to help with the writing of legal documents and should be familiar with various deal structures. Having said that, they ought to additionally suggest that you consult with a private legal group before signing any papers.
Use your broker for the preliminary paperwork and deal structure, but always have it examined by attorneys before you sign anything. You must make sure that all of your Ts are crossed and your Is are dotted since there are so many distinct rules. The tiny legal fee may wind up saving you money and problems in the long run.
For everything else, remember to reach out to Bizspokes for a bespoke business marketing service.