Selling your business can be stressful. For this reason, it makes sense to bring in a professional business broker to help you through the process. The following are some questions to ask a potential broker before you hire them.
Does the broker have the right experience?
You need a broker that has experience in selling a business that is similar to yours -- not just in business type, but also in size, number of employees, and location. It's a good idea to check the sales history of any broker you are thinking of working with. You may also want to contact past clients for a referral, so you can be alerted to any issues they may have experienced with the broker you are considering.
What is the marketing plan?
The broker should be able to provide you with an in-depth marketing plan for your business. The broker should also provide you with a marketing budget, as well as where they plan to list the business and whom they plan to contact to get the sales notice in front of the right eyes.
How is the business value determined?
Don't sign a listing agreement until you and the broker can reach a satisfactory determination of value. The broker will need to access all of your business financial records in order to develop an accurate valuation. This will allow the broker to help you come up with a value for which the business is likely to sell. Hammer out all the details on valuation, including both cash price and the price with terms. This is also the time to agree upon the percentage of the sale that the broker will keep.
Can the sales process be kept confidential?
If you need to keep the sale confidential until it is completed, such as to avoid panic among the staff or investors, then you need to make sure the broker you choose has experience and past successes with confidential sales. The broker should be willing to sign a confidentiality agreement, as well as be able to provide examples of past confidential marketing plans that have worked well.
What is on the listing contract?
Finally, review the listing contract in detail before signing anything. The broker should be willing to go through the contract line by line and explain everything clearly. A good contract won't just detail the mechanics of the sales process, but it will also be a finite length -- in general, a contract should be good for three to 12 months, or the window of time the broker expects it to take to sell the business. Contracts should also include marketing plans, communication policies, and the commission agreement.
Contact a business brokerage today to get started.