Finding the best California business brokers to interview to sell your small business takes time and a knowledge of how business brokers operate and sell businesses. With the help of the tips below you should be able to pick a business broker that matches your needs to sell your business.
1. Determine what expectations you desire from a business broker well in advance. Make sure you discuss and convey those expectations to the business broker you select. Direct and open communications about expectations and other issues with your business broker is critical in selling your California business. Try to attend live broker workshops on selling a business to meet potential brokers and ascertain the personality and knowledge of various business broker professionals.
2. Ask all potential business brokers how they advertise businesses for sale. Make sure they allocate an adequate budget for advertising and marketing to sell your business. It takes approximately a budget of $1000-$3000 in advertising and marketing costs to get successful exposure in the marketplace and reach the best qualified business buyers.
3. Have the business broker determine the adjusted net income and valuation of your business before you sign a listing agreement. Ask them about a cash price vs. a price with terms involved. This is very important since over 70% of California businesses never sell - usually due to - too high of price for the marketplace or unrealistic terms and conditions on selling the business. There are many ways to structure a deal - you need a business broker who can be honest with you and discuss these variances with you.
4. If the sale of your business is confidential - you need to know how the broker is going to keep the sale of your business quiet while still marketing it. Make sure your broker or agent is using a professional Confidentiality Agreement form for your protection and keeps these on file at all times.
5. Make sure the business intermediary you select has prepared your business for marketplace - are all the financials and tax returns in good order and understandable. Do you have all documents ready for review like your lease agreement, equipment leases, and contracts with vendors, etc? Time kills deals and if your broker doesn’t have it together, business buyers will leave fast for another business for sale!
6. Make sure the intermediary you select to sell your business has experience or knowledge with selling your type, location, and size of business.
7. Returning phone calls in a timely manner is critical! Make sure the broker or agent you choose is good about getting back promptly to potential buyers. You would be surprised how many business brokers delay calling back buyers - remember the sale of your business is in “competition” with the sale of thousands of other California businesses - you want to make sure your business broker is responsive in getting back to potential buyers.
8. Time kills deals. Make sure the intermediary you select is responsive in getting things accomplished and moving things along. Deals tend to go south when parties aren’t moving forward on a deal at all times.
9. Constant and continuous communication with your broker is important - make sure you let your business broker know what your expectations are for letting you know how things are progressing (i.e. once a week updates, only call when something is going on etc. - its up to you, however we think it is important that at least weekly dialogues between seller and business broker is important so you can see how things are moving forward). Find out how many buyers have responded, and any feedback on all buyers who have expressed an interest in your business for sale.
10. Make sure you pick a business broker who spends the needed time on your business for sale. Some business brokers take on too many listings knowing that some may not sell - it’s a numbers game to them. You need someone who understands your business, what your expectations are, and who can properly get your business sold!
11. Businesses on average typically take six months to two years to sell. If your broker does his job correctly (and utilizes the TIIC Method of selling businesses) your business should easily sell within two to six months!
12. The listing agreement/contract should include: length of time they will be representing you (three to six months is typical), how they are going to advertise and market your business for sale (get the details and budget), how often they should be contacting you about buyers and deal updates (at least weekly), what happens when the agreement expires - with all the buyers who have signed confidentiality agreements during this period, what happens if you find a buyer - what is the commission then, will they cooperate with other business brokers/agents on your listing (this opens the market to more buyers), etc. - get it all in writing so you both know what the expectations are!
13. California business brokers and agents typically charge a commission between 8% to 12% of the actual selling price to sell a business. You get what you pay for so if you negotiate a lower commission make sure you aren't losing a lot of necessary and essential services because of the lower commission structure.
About The Author: Peter Siegel, MBA is the founder and President of BizBen.com - Businesses For Sale In California. A nationally recognized author (3 books and a syndicated small business blog) and expert consultant (national SBA small business specialist) on selling and buying businesses, he provides professional assistance to business brokers, agents, and business owners in getting maximum response in their advertising & marketing efforts in regards to selling small to mid-sized businesses. If you are selling a business and need professional assistance utilizing high performance advertising, marketing, and highly effective strategies, or individual customization with your BizBen Power Search options in buying a California business, you can reach him at 925-785-3118.
Comments Regarding This Blog Post
These are great points. I suggest a potential seller may also look at BizBen and call up business brokers, and inquire about a business as a potential buyer, this will allow them to see if A) They answer phone calls in a timely manner, B) How they conduct themselves and their professionalism. A business broker may respond to a potential seller in a prompt manner if they are responding from a call off of a flyer or other marketing material, but a potential seller may want, and should know, how they treat potential buyers when it's their business on the line.