A business broker is an intermediary that assists in the buying and selling of businesses by matching up buyers with sellers and negotiating deals on behalf of both parties. A good broker will have a thorough understanding of their clients’ needs and have an extensive network to help them find potential matches. Their services vary from brokering complicated mergers and acquisitions to facilitating simple sales between two owners who want out but aren’t sure how best to go about it. Here are some of the steps you should take when choosing a business broker.
1. Identify Your Needs
A business broker can give you many benefits, such as knowing how to buy and sell a company quickly for top dollar, streamlining the process, so it’s easier for everyone involved. That said, they can’t work miracles – if your needs aren’t compatible with what a broker has to offer, you may be better off going elsewhere. Don’t feel like you have to go with the first broker you meet or that you have to take whatever they offer.
2. Ask for Referrals
If you know other people who have worked with business brokers, ask them about their experiences and if they got what they were looking for. If not, ask what went wrong, so you don’t make the same mistakes. Be sure to do your due diligence to find out if there are any unresolved issues with the brokerage which could come back to haunt you.
3. Research the Broker
Look for reviews from other clients and see if there are any complaints on file with regulatory agencies. If you can’t find much information about a particular brokerage, ask why not.
4. Check Their License
Most businesses are required to have a license which they must renew every year. If the broker’s license is no longer valid, they can’t do business with you until it has been renewed. This means that if there are problems with your deal, you may not be able to seek legal redress.
5. Get It in Writing
No matter what kind of business you’re buying or selling, make sure that all information that pertains to the transaction is in writing and that you both sign off on it. This is especially important for any promises made by the broker, such as what they can accomplish and how much you’ll pay for their services.
Statistics referenced by The Business Buyer Resource Center show that only 20% of all the firms on sale ever sell. This is because the process of getting a company sold is long, arduous, and riddled with pitfalls. However, using a business broker to help you through the process can streamline it considerably. That’s why it’s important to not only choose a broker carefully but also to consider what they can offer you.