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5 Questions to Ask Before Hiring a Business Broker

You have two available options when you decide to sell your business, either go with your own or hire a business broker to handle your transaction. Although it is possible to sell a business with your own, but most of the business owners don’t have enough time, contacts, or objective to negotiate a fair and safe deal. In this scenario, hiring a business broker could be a good idea. However, you must ensure that the broker you are hiring can properly represent your business interest. To make sure, you can ask these five question prior to hiring a broker:

  1. How much experience you have in dealing business like mine?

It is important to hire a business broker who holds a wide experience in dealing businesses like yours. Selling a hospitality business is much different from selling a website. It is not only a completely different business model, but the potential buyers are much different as well. Successful business brokers hold number of potential buyers in their pocket, which helps in closing the deal in an effective way.

  1. How many potential buyers you have?

Immediately after knowing brokerage experience switch to this question, and find out how many potential buyers he/she can provide you on day one. Many brokers claim they have thousands of potential buyers with just a data base of emails. Make sure you are hiring a business broker who hold reasonable number of buyers, but they have good relationship with them. Don’t go for a huge database presented by someone.

  1. How many projects you are handling now?

If you got satisfactory answers in couple of above mentioned questions, then you must query for dedicated time you are going to get from him. Asking the number of projects on which he/she is currently working can give you a clear-cut idea that how much hours a day you will get. It is advised to go with a broker who holds three to five listing.

  1. How will you prevent my clients and competitors from hearing my business is for sale?

Keeping the sale of business confidential is quite important. Check for the policies they adopt to ensure confidentiality of sale. If your clients are made aware of the sale they might interpret it as trouble and could result in loss of revenue at the peak moment, because your current revenue at the time of selling will be crucial. In addition, make sure competitors don’t know that you are exploring options to sell.

  1. What is your valuation methodology?

Asking for valuation methodology can give you an indication of how experienced they are at the end. If he or she come with a response like your net income will be multiplied by this or that, then turn around and check for another one. Valuation calculations have several factors to consider depending upon the model of business, and only a well experienced can make you understand the methodology.

If you are looking for one of such business broker, then count on ValleyBiggs to get the best assistance. They have a great experience in M&A, and look every project as a new challenge, which would be beneficial for you.

Published on: March 3rd, 2017