Choosing a broker
Whether you are selling or looking to buy a business, a business broker can be a valuable tool in both ensuring you get the best price, saving time in the process of looking/advertising a business, and ensuring the transfer of a business complies with relevant laws. Business brokers most commonly complete their real estate licence at an accredited institution, such as the Real Estate Institute of Victoria, before then completing further education to receive their credentials as a business broker. The process of choosing a broker is similar to that of choosing a real estate agent, but with a few key differences as it relates to your business rather than your personal finances.
Questions to ask when choosing a broker:
- What are their credentials? Many business brokers are either members of the Australian Institute of Business Brokers (AIBB). From this site, you can search for accredited business brokers near you and find out what relevant credentials they hold. Beyond this, be sure to ask any potential broker you may employ about their credentials.
- What is their background? This will give you an insight into their career path and choices, and give you an insight into what sort of broker they will be on your behalf. Find out how long they have been a broker and what they have done before this to gauge their commitment to their job.
- What business sales can they provide evidence of? Does their history as a broker, and the sorts of sales they have achieved, relate to your business? Do they volunteer this information readily and relate it to yourself or are they cagey and show little interest in identifying with your interests? If they don’t have experience in your area, see whether they ask questions of you and the industry you work in as this will give you an indication of how effective they may be as a broker. Even if they don’t have direct experience in your industry, finding out more about it may help them find links to those they already know that may be able to help them in finding you a buyer/vendor.
- What steps does your broker take in the process? How do they advertise your business or how do they find businesses? What avenues do they commonly pursue and what are the precise steps in the process? This goes beyond them just promising to advertise your business, but relaying to you what their exact strategy is in selling or buying a business. This knowledge will help you see and measure their performance when choosing a broker.
- How do they choose potential buyers? What filters do they implement in the selection of potential buyers to your business? They may ask you questions here to gauge whether you need to sell your business as soon as possible for instance, therefore eliminating any potential buyer that may only be able to purchase the business after a number of months.
- How many listings do they have? In other words, what sort of time can they commit to you, their client? It may be best to ask this question last and only if you have developed a good connection with the broker, so that there is less chance that they may feel on the defensive and either refuse to be open about this or inflate their current numbers. Second to relaying exactly how many clients they may have, can they assure you of what sort of time they are willing/able to put towards your sale.
Tip 1. What do they ask you? Are they interested in your industry and you as an individual? What are their people skills like, in regards to their communications skills, eye contact, etc. If you feel you are being buttered up, then will others? Without making it sound to simplistic, any business partnership/engagement should feel right, and those that don’t should be avoided.
Tip 2: Seek feedback from the other party, such as your buyer or the vendor you purchase a business from, as to the performance of your broker. Does their performance reflect your expectations of them?