Business brokers. Who are they, what do they do and how to find the right one?
Unfortunately, people aren’t as clear about the role of business brokers as they are to other broker agents despite there being thousands across the country.
In essence, business brokers usually act as selling agents for business sales. Just in the same way real estate agents operate in real estate sales and stockbrokers act in share sales.
So what are the requirements to become a business broker, and how do you know if you have the right one for you. Of course, there are probably more considerations than you think when appointing the right business broker to sell your business.
Still, it’s essential to consider that sometimes what the business broker doesn’t say can help you decide.
My name is Mick Godwin, and I am a professional business broker.
I speak with buyers and sellers all day, providing them with guidance and advice on everything from identifying different value drivers, determining the correct method for valuation, managing a sale and assisting buyers on what type of business model is best for them.
The role of a business broker
A good business broker needs to wear many hats when managing a sale. In the beginning, their role is to listen to the vendor (seller) to understand their business.
Depending on whether the broker is listening or not can sometimes be the first indicator of understanding if the broker is right for you, as some business brokers use this time to tell you about themselves.
If they’re doing this now, you can bet they’ll be acting for their own interests during the sale of your business.
We’ve all heard of board members giving themselves huge bonuses and leaving shares holders with nothing, or politicians helping their friends and not serving their constituents. It’s the same thing.
Once a broker understands your business, they can then give recommendations on a price that the market is willing to pay, not a price you want to hear (but hopefully, it’s the same amount)!
Finally, they manage the sale, talk to buyers, and assists solicitors through to settlement so you can continue running your business.
Is your business broker qualified?
However, just because your broker has a business card doesn’t mean they are perfectly qualified for the role.
Did you know that in QLD, you can sell a business by doing a real estate course!
This is a massive floor in our system and one that the Australian Institute of Business Brokers (A.I.B.B.) is working hard to rectify.
Being a member of the A.I.B.B., which I am, is an excellent way to know if your broker is qualified.
The A.I.B.B. stipulates that all brokers must adhere to continuous professional development (C.P.D.), resulting in members having a greater level of knowledge in business, strategy, operations and ethics in selling.
If you learn that your business broker is usually a real estate agent, you might want to look around for a qualified business broker.
If an agent doesn’t specialise in an asset field, they won’t know if their offers are high or low.
How to find the right business broker
Business brokers are everywhere.
If you know anyone who’s sold a business, you can ask them. Sometimes your accountant or solicitor may be able to recommend one. If you’re reading this, then your best option is to get in touch with me here.
Regardless of how you come across a business broker, I would strongly recommend you at least talk to 2 to 3.
Pick the one that seemed most interested in what you had to say and then follow their requirements for determining the value of your business. Just be wary; any broker offering a free appraisal probably doesn’t value their time or skill set too high.
But if you’re serious about selling and getting the best price the market will allow, $500 is money well spent when selling a business worth hundreds of thousands of dollars.
If you want to know more about what’s involved with selling your business, call or email me directly at the details below.
I’ll be happy to help you become clear on your next step to exit your business successfully.