Your Business Broker won’t buy your Business…..

It has always been a concern for me in my career, which spans nearly a decade as a Business Broker, of business owners choosing to list their business for sale with a Broker or firm that claims they can get the highest sales price in the shortest amount of time.

I understand the motivation behind listing with a Broker that suggests he/she can get more money. Who wouldn’t want to get as much money as they can for something they own. But remember business owners……

It’s not the Business Broker that will buy your business, it’s the market that will buy your business.

Your Business Broker has limited influence over the market, however a Business Broker’s reputation with their potential purchasers goes a long way in order to extract the best possible price for your business.

Think of it this way, if your broker is continually sending their prospects overpriced businesses, what do you think that will do to the broker’s reputation?

My advice when considering a business broker’s opinion on sale price:
1.    Ask your Broker if they have conducted their own research into the likely sale price of the business, rather than just asking and agreeing with what you want.

2.    Ask how they arrived at that price, and if possible, an explanation as to why that price was chosen?

3.    Experience – How long have they been in the industry? The longer they have been involved in business sales the more likely they will have the experience required to price your business correctly.

4.    Are they a member of an industry body such as the AIBB (Australian Institute of Business Brokers)? Being an active part of an industry body allows a Broker to collaborate with other Brokers and obtain more information on the market enabling them to go about pricing your business more aligned with market demands.

In my opinion, a good Business Broker will be prepared to tell you what you need to hear, not necessarily what you want to hear.