As they don’t have the time or objectivity to negotiate a fair deal, many entrepreneurs use brokers to help sell their business. But not all brokers have your best interests in mind. If you decide to use one, you should do so with a measure of care.
Here are a few questions you can ask a broker before hiring them:
1. How Do You Value a Business?
Asking business brokers how they value a business will give you an idea about their level of experience. If they give you a generic formula before asking you questions, take that as a red flag. Utah Business Consultants explain that there are many factors to consider in valuation calculations — one single formula does not work for every business.
2. Have You Sold Businesses Like Mine?
You need a broker with enough experience to handle your listing. So before hiring one, ask if how many businesses similar to yours they have sold. Do not confuse this detail with business categories, as there’s a huge difference between selling two companies in the same category or type.
In the restaurant industry, for instance, selling a 100-person restaurant and bar is different from looking for buyers for a café that can only seat up to 20 people a day. Make sure you work with a broker who understands the specific requirements of selling a business like yours.
3. Do You Assist with Sales Contract Preparation?
Most experienced business brokers know the different ways to structure deals and assist with the paperwork. But they still advise their clients to hire a legal team to review contracts before signing them. If a broker you’re considering to hire doesn’t know how to help you with the initial paperwork of the transaction, then you better look for a broker elsewhere.
Using a third-party professional to handle your business sale is a great strategy, but only if you hire a broker who is qualified to negotiate a deal while representing your best interests.