Selecting a Business Broker - What To Look For

You have worked very hard to build your business and after much deliberation, you have decided to sell your business and retire from the industry.  You have decided that it would be best to engage a professional business broker to market your business as opposed to trying to sell it yourself.  While a professional broker can help you maximize your sale price and reduce much of the stress often associated with selling a business, selecting the right broker will be critical to your marketing success.  

 

Specialized Experience:

Look for a broker that specializes in selling businesses similar to yours and that they have experience in your industry. 

 

Objective Valuation

You should be suspicious if during the first 5 minutes of your initial meeting with a broker they promise they can get you your asking price. A thorough evaluation of the business is required before a realistic offering price can be reviewed. While in many industries “rules of thumb” may exist they should always be reconciled with an economic approach and a thorough review of the Business and industry. 

OSTIR BUSINESS BROKERS LTD is  a business brokerage boutique, and Gary Ostir has completed introductory, intermediate and advance valuation courses at Canada’s pre-eminent business valuation organization and has over two decades of experience in providing expert business brokerage services and advice.

 

Education and Experience

If the broker does not have sufficient valuation education and training, they may not be able to properly communicate and negotiate with the buyers and their professional advisors.  If you are not working with an experienced and professionally trained business broker you will be at a distinct disadvantage during negotiations and unlikely to realize the highest possible sales price.

Is the Broker licensed to sell or lease real estate

The majority of business brokers have a real estate license. Even if your business does not include real estate, your broker should be licensed. Just because a broker holds a real estate license doesn’t mean they should also be selling commercial and residential real estate. The best business brokers hold a real estate license but focus on what they do best.  

In theory anyone can try and sell a business but it is illegal in most jurisdictions in Canada for a party to broker and/or represent a buyer or seller in the purchase and sale of a privately-held business, unless the party is a registered brokerage or a practicing attorney providing a legal service.

 

Too many listings

You should select a broker who will make selling your business a priority and not just add it to their website’s “businesses for sale” list. Some Brokers take on as many listings as they can, enter them on their website and provide little other marketing service. These Brokers hope to receive as many inquiries as possible - many from unqualified prospective purchasers. This is simply a “numbers game” and not a strategic approach to marketing nor one that maintains confidentiality.

 

References

Before selecting a business broker, consult your accountant, lawyer or banker.  Many of the top business brokers have developed a good reputation and as a result are probably known to many of the local professionals including lawyers, accountants and bankers. Be suspicious if a prospective broker is unable or unwilling to provide references or if your professional advisors have never heard of them.

 
Posted by Administrator Administrator at 10:20 AM on Wednesday, November 19, 2014
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