Whether last year caused changes in your life, or you’ve resolved to take an entirely different direction this year (or both), buying or selling a business is one of the most important decisions anyone can make. The successful outcome of these possible transactions will be due in large part to your choice of business broker. In this article we will talk about how to find a business broker in 2021 (and beyond) to help you make the best choice for your future.
We’ve already said that buying or selling a business will be one of the most important decisions (financial and otherwise) of your life. That means that hiring the right broker will either be the very first decision a buyer makes or the very last decision a seller makes. We think there are three indispensable qualities all business brokers should have:
- Knowledge. There’s so much knowledge that goes into being a broker. Brokers understand the sale process and the worth of valuations, as well as how to properly market and price your business. They have solid broker agreements that are simple to understand. They may also have certifications that attest to what they know. They understand the importance of confidentiality throughout the process and will explore tax and legal questions with you.
- Experience. There is simply no substitute for experience. Don’t be afraid to ask brokers how many years they have been in the industry and/or how many deals they have been part of. Now, everyone has to start somewhere in their broker journey, so be willing to consider someone who has a lot of experience in your industry even though they may not have been brokers for decades and decades.
- Industry Knowledge. While brokers work with an impressive variety of businesses, over time particular industries or business sizes become sweet spots for them. Don’t be afraid to hold out for a broker, or broker team, who have the proven experience. That experience will often lead to better outcomes for you.
These next two qualities aren’t “deal breakers” but we consider them very important:
- Connections. There are going to be other people who are going to make this journey with you, bankers, accountants, attorneys, etc. A broker with a lot of connections can help you find a missing resource of your transaction that you might not otherwise have obtained on your own. Not everyone networks in the same way, but networking is indispensable for brokers, and also tells you a bit about how they conduct themselves.
- Likeability/Compatibility with you. You’re not going to marry your broker, but you should consider the realities of a 3-18 month relationship: you are going to be working together on a serious and intense project, involving highly personal issues, from the start of your transaction to the end. If your initial meetings aren’t going well, that might be a sign to keep interviewing. Do not discount the importance of getting along well with your broker: that relationship will keep you going through the challenges that will surely be ahead (as they are) on your business buying/selling journey.
Where to Look
The best place to start, obviously, is with the people you know. Check with your CPA, attorney, business coach, etc. to see if they know anyone worth checking out. Next, discreetly put out feelers in your social circle. If nothing comes up within these inner circles, consider looking up some of the business brokerage/M&A firms in your local area. Check for testimonials and reviews but also take note of some of the names of the principals and brokers and head over to LinkedIn. Type in their names and see if you already have a personal connection (LinkedIn will show you if you do).
All throughout the process, remember that knowing where you want this journey to begin (or end) is an important landmark to help you find the right person. Share those thoughts in any interview with a potential broker: the answers will be a helpful guide to the conversation.