How to Choose the Right Business Broker
Updated: September 06, 2021
Selling a business can be a complicated process. Business brokers are the professionals who can help guide you from preparing the business for sale through to settlement. We take a look at how business brokers are licensed, how you can assess their abilities and what type of questions you can ask when comparing business brokers.
Business Brokers Qualifications
What is the role of a business broker?
A business broker is a licensed professional who acts on behalf of a business owner to assist them in the process of selling their business (or franchise). The main objective for a business broker is to find the right buyer for a business (or franchise) and to help the owner successful exit or sell part of their business (i.e shares). They will guide the owner (aka vendor) to prepare the business for sale, market, negotiate and guide the sale to settlement.
A business broker may also work with buyers to guide them through the process of buying a business.
Business brokers are licensed professionals who can assist with buying or selling a business (or franchise).
What training does a business broker have?
There are different training requirements to receive a license in each state. Generally, a business broker must complete a certificate via an RTO such as CPP40507 Certificate IV in Property Services (Business Broking). This can then be submitted to the state governing body that will issue their license.
The majority of successful business brokers have previous experience in owning or managing a business. It is common for business owners, accountants and advisors to transition into the business broking profession. This experience can be extremely beneficial to the brokers' ability to communicate with vendors, evaluate the business and successfully guide it through to settlement.
How can I check a business brokers license?
In Australia, licensing of business brokers is handled by each state. They are usually licensed alongside Real Estate agents though some states have special classifications for ‘business agents’. It is important to check the governing body in each state to ensure the broker has a current license. You may ask a business broker for their license number to check its status.
Check a brokers license by state:
NSW, QLD, VIC, SA, NT, TAS and ACT.
Finding the right business broker for your business requires you to ask questions.
How to Choose a Business Broker based on Experience.
When choosing a business broker you will want to ensure they have the ability to successfully guide your business sale to settlement. Business brokers may specialise in a certain industry such as hospitality, tourism, transport, medical etc or they may sell a variety of businesses. It's important when evaluating a business broker, you take into account their previous experience selling businesses similar to yours and that they have a good style of communication.
1. View their current listings
View a business brokers current listings to see the type and size of businesses they are currently selling. It will help you assess whether they are handling similar types of businesses and the areas and regions they operate in.
You can view brokers or brokerages current listings via:
2. Ask Questions
The best way to assess a business brokers skills is to have a conversation with them. We have put together a list of 16 questions you could ask a business broker to get to know them and their services. One of the most important roles of a business broker is to effectively communicate between the buyer and seller, so communication skills are very important.
One of the first things you will want to look for in a prospective business broker is a verifiable track record. A good broker should have positive testimonials or vendors they can connect you with. If a broker has no client feedback, be wary.
Download 15 Questions for Business Brokers Checklist
3. Check their Licensing and Memberships.
In Australia, we have a number of professional organisations that are established to provide support and improve the performance of their members. The AIBB is the peak body in Australia for business brokers. They continually reviewing training standards, making Government recommendations and provide a level of quality assurance. Business brokers can belong to a number of relevant organisations such as the AIBB and Real Estate Institutes in each state (e.g. NSW)
This is the peak body for business brokers since 1989. All business brokers who are registered with the AIBB need to undergo additional training to receive their accreditation logos. You will see these logos appear on business brokers who have undergone the necessary training with the AIBB.
Every business broker must be licensed and may belong to organisations such as AIBB.
4. Review their Advice
Business brokers who are leaders in their field will provide advice and information for business owners. They have years of knowledge and experience and want to guide business owners to make well-informed decisions. Check out social media, youtube, industry publications and the brokers' website to see what advice they are currently providing. We regularly have leading business brokers appearing in our Bsale Magazine.
5. Cross-check Answers
To ensure the business broker is providing current and accurate information in your discussions you will need to do some research. Review the websites the broker appears on, speak to previous vendors and look for online reviews. Its important to perform your own checks.
Investigate what the business broker is saying.
6. Compare
Finding a broker who has experience is one thing, but do they have that X-Factor to get top dollar for your business. You will need to compare a number of business brokers to see who is the right fit.
It may take 6-12 months to sell a business, so you will be in communication with your broker during this entire period. You need to be confident in your decision as they will guide you through the entire process. You want to know they will do what is best for you and your business.
Reputable business brokers will have a network of commercial lawyers, accountants and business valuers that they use during the sales process. It's worth reviewing these contacts as well to see how customers are reviewing them.
Download infographic for choosing a business broker
In the end, you should be happy with your decision and proceed confidently with your business sale. If the broker is requesting information it's important to respond quickly to ensure a smooth process. There needs to be good communication between the vendor and the broker.
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