Points to Ponder when Choosing a Business Broker


Communication and feedback is important within a relationship with a business broker. A good broker will at least respond to all offers and inquiries quickly to show they are serious. Proper business courtesy demonstrates a professional attitude and that they are serious and committed. Another thing to look for is the level of detail in their business profiles.

There is a lot of information to consider when making an offer on a business opportunity listing, including the business’s strengths, weaknesses, opportunities, marketplace, competitors, legal issues and background. When a broker responds to your inquiry with a one-page description of the business, and does not have much more data or backup to provide to you, you know this broker isn’t going to be the most effective to work with. This shows how little they care to know about their listings. This is one reason why 80% of businesses listed do not sell.

A good broker will do all they can to insure the business will sell quickly if they are doing the seller a good service. They will understand that the seller has to keep running the company as if it is not going to sell. If the seller is forced to focus too much attention on the sale, they will find their business declining. With this in mind, a good broker will provide a good service to the buyer as well, when they care to know enough details about the business to present to an inquiring buyer even though they often represent and are paid by the seller.

There are three important issues to discuss with business brokers:

Ask them to walk you through their process of working with a buyer
Ask if they co-broker deals of if the simply sell their own listings
Ask what is the typical deal structure of their deals

Their answer to the typical deal structure of their deals is an indicator as to how effective they will be as a broker. If they simply answer, “mostly cash,” they are either “bluffing” or not selling enough businesses. If they answer “mostly third-party financing through a bank,” wrong answer, again; only about 6% of deals are financed that way. How about the broker who answers “Most of my deals contain some element of seller financing, creative financing, or creative deal structure.” This would be the broker to deal with. This one clearly understands that every deal is unique and they know how to massage the deal to a successful closing.

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This article is derived from an interview between Lance Hood from SuccessInsiders.com and top business buying expert Richard Parker.

From Lance Hood – SuccessInsiders.com


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