Seven questions you should ask your Business Broker:
1. How many businesses have you sold?
While VR has sold 90,000 businesses to date, we are not advocating that a broker must sell 90k BEFORE they are a qualified broker. We are saying that they should have experience both personally as well as within a network of more than a few thousand sold businesses. Every business is different and takes creative thinking on the part of the business broker to complete the transaction. They must have the ability to pull from thousands of transactions in order to piece together a completed transaction that does not disadvantage the seller or buyer.
2. Do you have an office?
Yes, most (that’s right most) business brokers do not have their own office. They work from an executive suite or worse - their home. Do you want to turn over your business that you have invested your blood, sweat and tears to someone who can’t even afford a full-time office and staff? What kind of impression does this leave on a prospective buyer of your business?
3. Do you have multiple brokers and agents in your office?
Synergism in the divestiture of a business is a powerful principle. Two are better than one.
4. Will you sell my business confidentially?
Most brokers "tour" your business with prospective clients. Industry average says it will take 50 buyers to find the one buyer that will purchase your business. After a few "tours" it is hard to explain to your employees why "these people" keep coming by to just look around. Another important point concerns how your confidential information is handled by the broker. How does the broker present your tax returns and other confidential information? Our VR office will only provide confidential information to potential buyers after they have been pre-screened and have signed confidentiality agreements.
5. How many business have you sold THIS year?
This is a different question than "How many have you sold". Many brokers have sold a number of businesses over the past 8 or 9 years, but now only sell 1 or 2 businesses a year. Do you want to be the only business that your broker sells this year? The problem is the industry is changing and you could be leaving thousands of dollars on the table because the broker you choose doesn’t have the proper experience THIS year. Many brokers and agents in other realestate areas such as residential real estate are trying to pose as Business Brokers, but they lack the experience and knowledge to handle the often complex transactions associated with buying and selling businesses.
6. How does the brokerage firm package your business for sale?
Does the brokerage firm create detailed marketing profiles as well as confidential profiles? Does the packaging involve industry information and information that makes YOUR business sellable over another business within the same industry? Don’t fall for the lame excuse that buyers are so abundant that there is no reason to properly package the business. With the advent of the Internet, buyers expect more information when a business is presented. By the way, that is why the "tour" must be done differently than the way it was done 10 years ago. (see question 4)
7. Does the Brokerage firm charge upfront fees?
In a recent industry study, while most brokers say they do not charge any money upfront, MOST brokers have something they charge for, such as packaging, marketing, or an in-house valuation fee. Since most business brokers do not sell many businesses per year, they can’t afford these requirements. We also find it amusing that brokers charge for their in-house valuations. Call VR for your free in-house valuation completed by professionals who have sold more businesses than anyone. Who else should value your business at a price that will actually sell.
