Hiring a Broker When Selling Your Company

Once a business owner has decided to sell their business, there are a number of factors to consider. One of the biggest questions is whether to hire a broker to assist with the sale. There are pros and cons to using a broker, but ultimately the answer is situation-dependent. A broker is a professional who normally specializes in valuing and selling businesses.Most business owners are experts in their industry, but they know very little about mergers and acquisitions.

Not all brokers are qualified or certified like a lawyer or an accountant. The best brokers and Investment Bankers focus on deals around $5M EBITDA and up; the brokers who focus on deals smaller than that can be less sophisticated. Also, brokers typically get paid a percentage of the selling price, so they may ruin a deal by giving bad advice to a business owner just because they are looking for the highest possible payout on the sale and not necessarily on the happiest outcome for the seller.

Owners often hire brokers because selling a business requires a sustained effort, one that brokers can assist with, allowing the owner to remain focused on running the business. The most effective brokers will be willing to provide work samples and client referrals and will take the time to learn about the business for sale and give owners a realistic idea of the valuation. They will also ask detailed questions about the business so they are prepared to answer interested buyers’ questions.

Our suggestion is for owners to meet with and compare multiple brokers, accountants, and lawyers and ask them about their prior experiences in order to find a good fit for the type and size of their company. Working with a trusted intermediary can help owners logically work through an often emotional process and secure the highest payout, while also maintaining the legacy and continuity of the business.

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