A gifted adviser is a strategic one, and formulating the right strategy is an art as accomplished as any other. To find the right skill, you must look beyond impressive advertising jargon to find real, functional talent.
Choose the right industry expertiseA sold business is a marketed one. You wouldn’t choose an internet marketing specialist to handle your branding, and you need to choose a specialist to handle your small business.
Your broker must be positioned to guide you to the right fit, and to achieve that, they must have the connections and experience to refine your exit strategy. That requires a long history of connections, so successful brokers have a niche.
Some focus on business size alone, while other boutique offerings cover deep industry knowledge.
Make sure you connect with your broker
Your business sale is a process, not a destination, and can take months to complete. Building and carrying out an exit is an intimate and complex process, so you need to get along with your broker.
Use your one-on-one meetings to determine whether your personalities match well enough to support an in-depth relationship.
Understand your broker’s fee structure
Most business brokers charge about 10% of the selling price, but they often levy upfront fees to cover valuations and marketing costs, too. If you need a fuller range of consulting services, they may charge an hourly rate.
Add attorney fees if your deal is a complex one and transfer fees if your business is a franchise. Not all rates are cast in stone, so don’t be afraid to negotiate.
Get testimonials and history
Your broker’s last four deals give you a wealth of information to inform your choice. Testimonials can give you an objective picture of a transfer agent’s work ethic and skill. You’ll also want to check if they’ve ever been sued by a listing client and whether they carry professional liability insurance.
When you sign your broker agreement, you give your agent the exclusive right to handle your sale, so due diligence can protect you from financial harm.
Agree on your timetable and fee structure in advance
The expenses involved in selling a business aren’t always straightforward. You will need to work with your broker to:
• Ascertain whether your business can function well without you. If it can’t, your sales price might drag your goals through the mud.
• Calculate if you can afford to exit, considering your post-retirement withdrawal rates, expenditure, and annual distributions.
• Work out if your business needs to grow to increase cash flow and investments so that it can fetch a higher sale price.
• Arrive at the most practical fee structure for your unique circumstances.
• Create a meaningful projection of your outcome, with a reasonable prediction of how long it will take to complete a sale.
It’s important to agree on a time table and fee structure before you sign the paperwork. You can’t push for a better deal after you’ve completed the buy-sell agreement, so establish a strong negotiating position in advance.
A business sale is one of the most important transactions of your life, and it requires a dedicated, connected adviser who is, above all, gifted at what he or she does.
Crafting an exit demands the artistic temperament of a marketer and the strategic skill of an investor. You need to find a business broker that can do this for the sale of your business!