Selling your business is one of the most significant decisions an entrepreneur can make. Often times a substantial amount of a business owner’s wealth is tied up in their business and they are unsure of how to extract that wealth and from what professional they should seek guidance from. When thinking about selling it is integral to select a quality team of industry-familiar professionals to provide necessary guidance during the process.
One of the key professionals to engage in the process of a business sale is an experienced business broker. But how do you identify a quality business broker and why are they necessary? When asked by clients why they should use a business broker I often describe to them the doctor versus specialist analogy. If you heart issues you are going to seek out a cardiologist because that is their area of expertise. You probably will not rely on your primary care physician to handle all of your heart health needs.
The same principle can be applied to looking for a quality team to sell your business. There are some crucial considerations to keep in mind when selecting a professional business broker and they are as follows.
- Is business brokerage their primary business? There are a number of commercial real estate brokers, and even residential real estate brokers, who claim to be qualified to sell a business. Typically these individuals, while they hold the licensing necessary to sell a business in Colorado, they do not have the transactional expertise required to support the business sale.
- Does the individual complete 1 – 2 business transactions per year, or do they complete substantially more deals annually? The number of deals a broker is closing is a good indicator of their expertise level and success rate.
- Does the broker or their firm have a database of active buyers? Having existing, local buyers will already provide a number of opportunities to market your business, especially if time is of the essence.
- How does the broker market your business? Are they just going to put your business up on a handful of websites, or will they proactively market your business to strategic buyers? This is a great example of simply listing your business versus selling your business. You want to select a broker or firm that will target specific buyer pools and actively market your business.
- Is the broker a Certified Business Intermediary (CBI) through the International Business Brokers Association? The CBI is an industry designation exclusive to the International Business Brokers Association and shows the broker has the experience and education and has made an investment in themselves to become an expert in the business brokerage industry. Working with a CBI provides a great advantage in the sale of your business!
- Is the broker you are speaking with a member of the International Business Brokers Association and the Colorado Association of Business Intermediaries? Brokers that associate with these industry organizations have a higher ethical standard and participate in numerous ongoing education initiatives. They also have access to a high-level network to facilitate the sale of your business.
Selecting a professional business broker to aid in your business sale process can mean the difference between selling your business and closing it down. For more information on the business sale process please visit our website or schedule a free consultation with one of our brokers today!
Matt Prescott is a Certified Business Intermediary with Transworld Business Advisors of Colorado. After having graduated from the University of Arizona, he initially worked in commercial real estate, later transitioning to sales for a Fortune 300 company based in Chicago. Matt has been working with Transworld since February of 2016 and is knowledgeable in a vast range of business industries. If you are interested in buying or selling a business contact Matt Prescott today!