Did you know that most states have no test of knowledge or standards of ethics to prove expertise as a business broker? Shocking, isn’t it? With no state regulation in place, how does a business owner know if the person who offers to help sell their business really knows what he or she is doing? Following are 10 compelling and measurable reasons to seek out a credentialed, certified business broker when selling your business.
Closing percentage. The top reason to use a certified business broker is that companies offered through business brokers have a much higher listing-to-closing rate than those offered directly by owners or some other advisor such as an attorney or CPA.
Confidentiality. In most cases, business owners want to keep a likely sale quiet before the deal has been done. They may not wish for competitors, suppliers or, in some cases, even their employees to know of the sale. The business can be listed by a business broker on your behalf and details such as the name of the business are withheld until genuinely interested buyers have been financially prequalified and have signed a confidentiality agreement.
Credentials. The professional assisting you with the sale of your business should have one of the following certifications:
- Certified Business Intermediary (CBI) credential from the International Business Associations (IBBA). This designation is a measure of their professionalism, education level, and experience.
- Merger & Acquisition Master Intermediary (M&AMI) certification from the IBBA is an elite designation that distinguishes its holders as seasoned intermediary professionals who have a solid educational background and proven accomplishments in completing deals.
Check a business broker’s website for published testimonials, and look for good reviews on Google My Business or other social media venues. Getting references from other owners is also a good starting point.
Track record. Expert business brokers will have years of experience behind them. They would have seen and experienced “the good, the bad and the ugly” sides of a business sale and therefore be well-positioned to advise you on process, valuation and business-selling best practices.
Strategy. Experienced business brokers are adept at handling the selling process from start to finish, as they have done it many times before. One of the key skills in developing a strategy is understanding what type of buyer you are looking for and how best to find them. There are also legal and regulatory processes that must be handled, information to be gathered from third parties such as accountants and attorneys, and a thorough, written review of your business to be developed. By utilizing an expert to help develop and execute your strategy, you are far more likely to achieve your desired outcome.
Exposure. Bottom line: The more inquiries you get, the greater your opportunity is to sell quickly. An experienced business broker will give you vastly greater, more targeted exposure than you can achieve on your own. They have many previous clients and an active database of interested buyers that are pre-qualified and looking to buy. They will also have access to industry databases and be able to engage strategic buyers at arms’ length that will enhance your negotiating position. Your business broker is a third party who has your back as well as a vested interest in the successful sale of your business. Their clarity and objectivity could mean all the difference in the sale process.
Networks. Just as you have built valuable and trusted networks in your business and your industry over the years, so, too, has an experienced business broker. The value of their networks and the knowledge and experience they share could be priceless in terms of your business sale. Experienced business brokers know many trusted professionals in accounting, finance and law and can provide referrals should you not already have the right professionals on your exit strategy team who practice daily in the mergers and acquisitions industry.
Time. Selling a business is a time-consuming process. Long before the negotiations or purchase period take place, there will be time spent separating out the genuine buyers from the list of interested parties. If you are working daily in your business and responsible for sales, marketing, staff, revenue and profits, it’s unlikely you will have the time to screen potential purchasers, provide all the necessary information or be available when likely buyers have questions. An experienced business broker will have all the systems required to handle these tasks on your behalf, leaving you to get on with what you do best—running your business.
Anonymity. By using a credentialed business broker, you can remain entirely anonymous throughout the entire sales process. Your business broker can act on your behalf in any or all negotiations after consultation with you so that the purchaser never needs to have your direct details. This can vastly assist your stress, objectivity and emotional state throughout the sales process.