| News Back Hiring a business broker requires diligence, too Stephen Drake - Idaho Business Review Once you have decided to sell your business the next-most important decision is to select the right professional team to help you accomplish your goal. Your professional team should always include competent legal and tax advisors with experience in selling businesses to be sure the sale is structured and documented appropriately You should also engage the services of business broker to be sure you properly market your business. Whether you have built an overnight success for a quick turnaround or own a multi-generation enterprise, you want the sale to generate as high a price as possible within an acceptable amount of time. Below we outline the most important questions to ask and specific issues to consider when selecting and engaging n business broker. Investigate the broker’s qualifications and experience. Brokers who market businesses that include real estate must be licensed by the Idaho Real Estate Commission. Make sure your broker is licensed and in good standing. Ask for references of recent clients and inquire about the broker’s experience, educational background and association memberships. Consider asking specifically if your potential broker is a member of the International Business Brokers Association, a respected professional organization. Further when you interview prospective brokers always meet with them in person. You should feel comfortable putting your business in the broker’s hands. Inquire about the broker’s methodology for selling your business. The typical brokerage process includes four phases: conducting a valuation of the business, preparing it for sale, marketing it and negotiating the transaction. A broker should be able to give you a detailed explanation of how he or she handles all four of these phases. Without complete representation in all four phases you might go to market with an undervalued or overvalued business or you may try to sell before the business is actually ready to present to a prospective buyer. Inquire about how the broker intends to market the business. Experienced brokers have many tools at their disposal for marketing businesses. If a broker’s only plan is to run an ad in a newspaper, you would be well advised to look elsewhere. Brokers should discuss other options, such as personally contacting potential strategic buyers in the industry and marketing your business through networks of buyers and other brokers. Check the broker’s workload. The broker with the most listings is not necessarily the best option for selling a business. A broker who limits his or her workload so that each listing is given appropriate attention will almost always bring in a faster sale, a higher sale price, or both. Ask the broker for a list of his or her current listings and inquire how long each has been on the market. Look for signs that the broker can adequately handle his or her current workload and has time to give your business attention too. The broker’s fee: A business broker’s fee should be based upon success payable at closing. Brokers may require a deposit in advance, but it should be fully credited to the selling fee at closing. Any deposit should also be refundable less a modest valuation fee, if you decide to terminate the engagement after the broker values your business. Brokers typically should not charge hourly fees for their time, nor should they charge for out-of-pocket expenses except in unusual circumstances. Review the “fine print.” Your broker should provide a written contract. Have your lawyer review the contract before you sign, and be sure the document includes the following provisions:
Is the broker a team player? The broker is only one person in a team that should be assisting you in selling your business. Good brokers encourage you to involve other professionals in the sales process. Any broker who says he or she can give you all the tax and legal advice you need is probably not acting in your best interest. With a complete and competent learn, selling your business should be a rewarding experience that maximizes your potential profit. An attorney experienced in purchase and sale transactions can help you assemble that team and benefit from the value you have created in your business. Edition Date: 05-17-2004 Back |