For the majority of entrepreneurs, selling a business is a process and not an event.
So, good luck to you if you’ve already listed your business and have had an offer for your business youd be crazy to refuse, but an average business sale handled by a capable business broker can easily take between nine months and a year to complete.
Considering the rewarding outcome, that’s time well spent if you’re in the hands of a competent professional. But if you have never sold a business before, how will you know you have chosen the best business broker for the job?
Here’s a rundown of some of the points to consider and the attributes you should be looking for in a good business broker whose expertise will guide you through the sale procedure and maximise your chances of doing well in the market.
Horses for courses
Generalists may tell you that selling a business is much more about selling than it is about industry specifics. That is very rarely the case.
Any broker needs to thoroughly understand the conventions and expectations of the market sector they are selling into.
To take one instance involving business pricings, whereas an EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) valuation is common practice in many industries, the accountancy world is oriented towards assessments based on multiples of GRF (Gross Recurring Fees).
Working with a broker who is conversant with your business catchment helps to quickly build trust and rapport with serious buyers. They will always respond more readily to an intermediary who can accurately convey the core information they need to know, and who can discuss business-related specifics with authority.
In addition, certain businesses may need new licensing arrangements or vetting procedures which will have important implications for any prospective purchaser. Your broker must know all about such pitfalls, and must also be well-versed in any common barriers which need to be overcome to convert an interested buyer into a keen purchaser.
Whilst you don’t have to see your broker as a buddy, it’s important that anyone representing your business in the marketplace should at least be on the same wavelength. It doesnt really matter whether your business is transient and populist, traditional and select, or any other combination of status and persona, it is essential to choose a broker whose own personality and core values are likely to promote and enhance, rather than undermine, the sale process.
At a practical level, this means meeting the broker (or if not the same, the person who will actually handle the deal) a number of times before making a commitment if possible in different circumstances e.g. in office, at your premises, in the company of other professionals etc.
Matters of scale
Make sure you understand the market level which best reflect your broker’s comfort zone. It is one thing to sell a high street business, but a different thing entirely to sell a business on Mayfair. There are strategies and protocols (no less real for being unwritten?) which apply at different levels of the market. You must be sure your broker belongs in the kind of markets where your business is likely to be sold.
Consider this issue very carefully because some deals are done in the office, others over a fish-and-chip supper, and yet others on the golf course. Also, it’s very possible a business insider? will get a better deal, while some sales handled by an outsider? may just never happen.
Jo joined Dynamis in 2005 to co-ordinate PR and communications and produce editorial across all business brands. She earned her spurs managing the communications strategy and now creates and develops partnerships between BusinessesForSale.com, FranchiseSales.com and PropertySales.com and likeminded companies.