You founded and have been growing your business for many years now. After all the blood, sweat, and tears, you’ve reached your goal of getting to an EBITDA (earnings before interest, taxes, depreciation, and amortization, which is your total income minus your operating expenses) of $1,000,000 per year and are now reflecting on the opportunity to cash out of the business to spend more time with your family, travel, and/or launch a new venture.
Choosing the right business broker is crucial to maximizing the sale price. There are a few factors to consider:
- specialized experience and expertise: is the broker experienced in your specific industry (for example, our deepest expertise is in the construction services industry), and does he (or she) understand the complex market dynamics and sector-specific valuation factors? does the broker have a proven track record of selling businesses of comparable size
- valuation capabilities: is the broker able to provide an accurate valuation of your business, including a clear explanation of the methods used and what is influencing your business’ value (e.g. strong cash flow, market positioning, and growth potential)?
- marketing strategy: have you been provided with a customized marketing plan that that showcases your business’ story, strengths, and growth opportunity, including a well-articulated Confidential Information Memorandum (CIM)
- confidentiality: do you trust that the business broker will handle the sale process discreetly, protecting your sensitive business information while attracting serious buyers?
- negotiation skills: does the business broker have advanced negotiation capabilities that would ensure the best possible terms that include but are not only limited to the sale price (e.g., favourable payment conditions that meet your needs and timeline can also be critical)? does he (or she) understand the legal and financial considerations at play when it comes to the deal structures and terms, which may involve earn-outs, escrow arrangements, and/or other relatively complex elements of the transaction?
- expert network: does the broker have strong connections with corporate lawyers, accountants, and financial advisors who have Mergers & Acquisitions experience and can support key aspects of the transaction?
- qualified buyer screening: is the business broker knowledgeable about how to thoroughly screen potential buyers, in order to ensure that they are financially capable to transact and are serious?
- transparent communication: do you trust that the business broker will maintain regular and transparent communication with you, allowing you to have a clear view of the buyer interest and negotiations?
- fee structure: is the business broker’s fee structure clear and in writing? do you understand the broker’s upfront fees (if any) and commission fee, as well as what other fees you can expect to incur in the sale process (e.g., lawyer, accountant, financial advisor)?
- reputation and references: what is the business broker’s reputation? have you had the chance to review the client testimonials, case studies, and industry awards and recognitions, and have you called the past client references to get a sense of the level of service you can expect?
- alignment with your objectives: has the business broker taken the time to understand your specific goals, which may include not only maximizing the sale price but also ensuring the continuity of the business and considering the well-being of employees? are post-sale arrangements being taken into account, such as your desire to stay on for 1 to 2 years in an advisory role to the company and what non-compete stipulations you may be amenable to?
The right business broker can help you reach the key objectives you have in mind when looking to sell your business.
Are there any other factors that you feel should be taken into account when it comes to selecting your business broker?
- in-depth market knowledge: does the broker have a clear understanding of the business landscape in your geographic area, including economic trends, market conditions, and your competitive environment? is the broker well connected and knowledgeable about how to reach the private equity groups, strategic acquirers, and high-net-worth individuals who could be a good fit as buyers?
- valuation capabilities: is the broker able to provide an accurate valuation of your business, including a clear explanation of the methods used and what is influencing your business’ value (e.g. strong cash flow, market positioning, and growth potential)?
- marketing strategy: have you been provided with a customized marketing plan that that showcases your business’ story, strengths, and growth opportunity, including a well-articulated Confidential Information Memorandum (CIM)
- confidentiality: do you trust that the business broker will handle the sale process discreetly, protecting your sensitive business information while attracting serious buyers?
- negotiation skills: does the business broker have advanced negotiation capabilities that would ensure the best possible terms that include but are not only limited to the sale price (e.g., favourable payment conditions that meet your needs and timeline can also be critical)? does he (or she) understand the legal and financial considerations at play when it comes to the deal structures and terms, which may involve earn-outs, escrow arrangements, and/or other relatively complex elements of the transaction?
- expert network: does the broker have strong connections with corporate lawyers, accountants, and financial advisors who have Mergers & Acquisitions experience and can support key aspects of the transaction?
- qualified buyer screening: is the business broker knowledgeable about how to thoroughly screen potential buyers, in order to ensure that they are financially capable to transact and are serious?
- transparent communication: do you trust that the business broker will maintain regular and transparent communication with you, allowing you to have a clear view of the buyer interest and negotiations?
- fee structure: is the business broker’s fee structure clear and in writing? do you understand the broker’s upfront fees (if any) and commission fee, as well as what other fees you can expect to incur in the sale process (e.g., lawyer, accountant, financial advisor)?
- reputation and references: what is the business broker’s reputation? have you had the chance to review the client testimonials, case studies, and industry awards and recognitions, and have you called the past client references to get a sense of the level of service you can expect?
- alignment with your objectives: has the business broker taken the time to understand your specific goals, which may include not only maximizing the sale price but also ensuring the continuity of the business and considering the well-being of employees? are post-sale arrangements being taken into account, such as your desire to stay on for 1 to 2 years in an advisory role to the company and what non-compete stipulations you may be amenable to?
The right business broker can help you reach the key objectives you have in mind when looking to sell your business.
Are there any other factors that you feel should be taken into account when it comes to selecting your business broker?