You only get one chance to sell your business.
That’s ONE chance to cash in on your most important asset. One chance to be rewarded for your life’s work.
According to the New York Times, 80% to 90% of businesses listed for sale with a business intermediary never sell.
No doubt there are many factors that contribute to this that are outside of your control – the economy, the market, and the industry to name a few.
The one thing that you can control – hiring the right advisor that will act in YOUR best interest.
If you see any of these things, beware:
The intermediary tells you they can get a very high price for your business. Higher than you expected. Higher than what your valuation advisor suggests. Beware especially if they tell you this in the first meeting. So know what is the value of your company before your first meeting with the intermediary.
The intermediary wants a big, big fee paid upfront without having a plan to sell the business. They will ask for this very quickly, often in the first meeting.
There does not seem to be much of a process or strategy to market your company.
The intermediary does not take the time to get to know either you or your business. They want to sign you up right away without knowing whether they can help you.
The broker doesn’t seem to know much about business valuations. Just the multiple or market approach. The Intermediary should be able to discuss business valuation concepts and how they apply to your business clearly and succinctly.
While there is no guaranteed method to find a good intermediary, here are a few questions you should ask.
What is the intermediary’s experience? It takes experience to successfully sell a business. Though they may have a less experienced support staff, the average age of an intermediary is 55 and for good reason. An intermediary needs experience in accounting, business valuations, law, and especially sales.
How will they market the business? The intermediary should be able to exactly show you how they will market the business. What tools will they use to identify potential buyers? This should be a multifaceted effort. Every business is a little different so there are many variations and strategies that can be used.
What services do they provide? The intermediary should be able to counsel you through the entire sales process. They should be able to provide complimentary services to your advisory team.
Is the intermediary willing to work with your advisory team? Does the advisory team know this intermediary? This will be very important as your advisors know the business better than the intermediary and can facilitate a transaction. Hopefully, you will have a strong relationship with critical advisors such as accounting, legal, tax and valuation before the time you intend to sell.
Picking the right Business Broker, M&A advisor or Investment Bank is critical to your success.
