张筱雨人体艺术
Selecting the Best Business Broker to Sell Your Business
As the managing director of a Pittsburgh based lower-middle market mergers & acquisitions firm I hold a unique perspective on the business transaction marketplace, the advisors offering you their services and the questions that you should be asking to make sure that you hire the RIGHT business broker / intermediary to represent your business for sale.
The most important thing to remember when interviewing potential business brokers is that it is the job of whomever you hire to CREATE A MARKET FOR and ultimately SELL your business. This may seem rudimentary. However, it must remain at the core of your broker selection process to assure the best intermediary is hired to represent your business for sale.
Does the person you are interviewing have the ability to successfully create a competitive market for your business and secure the best possible buyer for the business? Unlike owning stock in public corporations, real estate and/or other investment vehicles where an active, public market exists to divest your ownership share, no readily available market currently exists for the ownership transfer of your privately held business. Therefore, it is the fundamental responsibility of the representative you hire to create that market for you.
How do you determine if the individual or firm you are interviewing possesses the ability to create an active market for your business?
Here's where I suggest you concentrate your efforts:
- How does the business broker or intermediary plan to market your business for sale? Will they simply post it on the internet and hope that is sells? If this is the case I strongly suggest you consider another direction. Successful intermediaries will take an active approach to selling your business. In addition to listing the business for sale on available internet sites, successful representatives will:
1. Contact strategic industry buyers confidentially inquiring about their interest in a potential acquisition.
2. Present your business to an internally maintained database of financial and strategic buyers.
3. Contact other local professionals (accountants, attorneys, etc.) to provide them with a confidential overview of the businesses they are offering for sale and inquire if any prospective clients may have an interest.
4. Work with other business brokers and business intermediaries to cross-pollinate deal flow. Example: If an intermediary from ABC Business Brokerage is working with a buyer for a distribution company and another business broker from XYZ Business Brokerage is working with the seller of a distribution company, only the intermediaries working together will uncover the fit. Not all brokers will cooperate with other intermediaries. Make sure yours will.
Now for my list of cautions:
- Do not get hung up on the business broker's experience within your industry. Any intermediary worth his commission that does not currently possess experience within your industry will seek it. The importance of industry experience will vary depending on the industry and size of the business. However, it is important to recognize that industry experience is secondary to whether or not you believe in the intermediary's ability to successfully create a market and consummate a sale for your business.
- Price should not be the determining factor on who you hire. Remember the old adage, you get what you pay for? Don't learn this lesson while selling the biggest and most valuable asset that you own. Work through the process detailed above and hire the BEST person for the job, not the cheapest.
- Don't have the person selling the business be the one to opine to the value. I have seen a lot of brokers attempt to value businesses. My advice, be cautious with this approach. Unless your business is so small that there is no cost / benefit to hiring an accredited, independent third party for the valuation, I would recommend you do so. Knowledgeable buyers will not find comfort in a value derived by your hired representative. An independent, certified, third party is a must. Accrediting agencies include: The American Society of Appraisers, The Institute of Business Appraisers and The American Institute of Certified Public Accountants.
Your business is for all intents and purposes the largest and most valuable asset that you own. Selling it can be a highly emotional and stressful process. When selecting a representative to handle the sale, take the time to interview multiple intermediaries. Compare and contrast their styles, methodologies and work ethics. Don't get blinded by the cost as most good intermediaries will easily pay their own fee through the added value they will bring to your transaction. And remember, hire the person you feel is best suited and motivated to generate a market and complete the sale of your business at the maximum potential selling price.