Selling a business? Learn to spot a good business broker

Friday, August 28, 2009 by Mark

You may have considered availing of the services of a business broker if you are thinking of selling your business. Although hiring a business broker is the best step you can take, it is important to differentiate a good business broker from a bad one. A lot of businessmen fail to spot the shady business brokers from the really experienced ones, assuming that all brokers are honest and experienced. But this is a wrong assumption. As a business for sale owner, you need to realize that there are some unprofessional business brokers out there, and only if manage to find a good one will you be able to sell your business successfully. The following are a few factors you can take into consideration for judging a business broker:


  • Morality or Ethics

    • Lack of ethics is a classic characteristic of a bad business broker. Major botch ups related to selling a business are due to the fact that the concerned person failed to adhere to commonly-accepted ethics in the industry. However, there is no tested way of measuring the concerned person's ethics. The most you can do to ensure that your business broker is sound in ethics is ensure that he/she is a Certified Business Intermediary (CBI) from the International Business Brokers Association (IBBA). This is in no way a guarantee of morality, but at least the business broker will follow the code of conduct set by a professional body like IBBA.


  • Integrity

    • Again, the integrity or honesty of a business broker is not easy to judge. But if you want to sell your business successfully, you need to assure yourself that your business broker will be honest with you throughout the deal. You can question the concerned person in detail and judge him/her by the answers you receive. Was the business broker clear in their answer? Was he/she willing to sit down with you and discuss all issues? Was he/she vague or forthcoming in the answers?


  • Capability for Promotion

    • Selling your business is totally dependent on your business broker's promotional capabilities. If he/she is not able to market it properly, prospective buyers will not even come to know that your business is up for sale. Discuss with your business broker how exactly your business for sale is going to be promoted. Unethical business brokers merely post your business details on the internet and charge you a hefty fee for nothing. As opposed to this, good business brokers have a set procedure which they follow for promotion, which includes sending the information via email and post to their list of buyers, networking with them etc. Only through constant exposure to potential buyers will you be able to sell a business successfully.


  • Established Network

    • Experienced business brokers who have been in the industry for a long time will have listings of buyers whom they can get in touch with immediately. They will also have network of professionals who will know who is in the market, looking to buy. Selling your business will be a success only if this network is put to work for your business for sale.


  • Reputation

    • A good business broker's reputation will not only be verifiable through his/her past clients, but also other professionals who are involved in the business selling process, like accountants, investment bankers, attorneys etc. Talk to other people who are not related to the business broker directly but are likely to have an idea regarding his/her reputation. What other people think of the person concerned will say a lot about his/her professional capabilities, reputation and experience.


  • Skills and Experience

    • Interview potential business brokers personally. The way they answer your questions will tell you a lot about their skills as well as experience. Their knowledge about business buying and selling will also reflect in the way they handle your inquiries. Talking to past clients is also a must for judging skills related to selling a business. Make sure you get in touch with them and discuss the pros and cons of working with the business broker in question.


Following the above-mentioned steps will ensure that you have at least an idea of what kind of business broker you are dealing with. But rest assured that when you finally find a good professional, your partnership will result in you selling your business successfully.

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