As a business owner, someday you will want to exit your business, preferably on your terms. When that time comes, how will you find and more importantly assess a qualified professional to help you complete the sale?
In general, a business seller should look for a business intermediary who practices full-time in facilitating the transfer of business ownership. A full-time intermediary should know what it takes to value, list, confidentially market, and sell businesses. To help you determine if we, or any other intermediary, are a good match for you, start by asking a few basic questions such as: "Have you ever owned a business of your own?" "How long have you been selling businesses?" "What size transactions have you closed?" Most business intermediaries will have prepared responses to such questions and they may give you some basic information that will help you to determine the background and experience an intermediary can bring to bear in selling your business.
But as most of us are aware, responses to such questions may be those which
we want or
expect to hear. These responses shed little light as to how an intermediary will
behave with you in challenging and complex situations where personal motives and emotions can cloud objectivity.
To learn more, you may want to investigate how the intermediary has dealt with challenging issues in the past. Understanding the intermediary’s actions and decisions in real life situations will give you a more in depth sense of how they will represent your business and interests.
At Premier Sales, we welcome the opportunity to share with you our experiences and approach in dealing with:
- Challenges at or near a closing and how we overcame them;
- Potential conflicts with issues of disclosure and how these were addressed;
- Representing a seller or a buyer, and what duties do we owe to each; and
- Actions we have taken that were in the best interest of our clients that were not in the best interest of the intermediary or brokerage.
Understanding how a business intermediary behaves on the field and what they have accomplished on behalf of their clients is important in determining if the intermediary is right for you.
Another key element in selecting an intermediary is
determining their actual effectiveness in closing business sales. Since the real challenges of selling a business arise in the negotiation and closing phases, knowing that the intermediary you choose is effective in actually closing deals will tell you much about their abilities and skills.
Additional questions that any reputable intermediary should be glad to answer are:
- "How many businesses do you currently represent?"
- "Of the businesses you have represented in the last year, how many have sold?"
- "Of all the businesses your brokerage firm represents, how many have sold in the past year?"
Responses to this information will provide a glimpse into how effective an intermediary / brokerage is in actually
selling and closing a business vs. just being able to
list a business. The national average for selling a business is pretty low – about 18% – 25% of all businesses listed, will actually sell
(At Premier Sales we consistently achieve a closing ratio of greater than 75% of the businesses we represent). Look at the brokerage's current listings to get an idea of how many businesses they currently represent. If they have 150 businesses, they should be closing
at least 30–40 businesses a year. If they are not, further investigation of their skills and focus is warranted.
Lastly, be sure you are comfortable and able to work well with the intermediary you select. You will be partners during the time it takes to complete the sale of your business and during that time, you will have many important choices to make. So, choose your partner based on carefully considered criteria. It may be the most important financial decision you will ever make.
Contact us at (480) 905-9030 to learn if we are a match for you.
