How to Choose a Business Broker
For many business owners, selling their business for a high price is a dream that often results from many years of hard work. But navigating the sales process and finding a buyer can be a challenge. A popular option in Australia is to use a business broker who can help you connect with the right buyers and orchestrate a smooth sales process.
Finding a broker may not be difficult but choosing the best one for your needs requires due diligence. No two brokers are the same. The final price you get for your business, along with how long it takes to sell, will be heavily influenced by which broker you choose. To assist you in making the right choice, follow our advice on selecting a broker who’ll get the job done.
Steps to choosing the perfect broker for your business
- Check their levels of experience
Like in real estate, an experienced business broker should be able to showcase previously sold businesses. It's important to assess their previous performance and sales records. Unlike real estate, the details of the sale of a business are not easily available. A lot of business owners like to keep the information confidential to ensure the continued success of the business. So, the best way to obtain sales history is to talk directly to the broker and request references from previous sellers. You can also review their online testimonials and website.
Viewing a business brokers current listings will also help you gauge the type and size of businesses they are currently selling. You can view a brokers currently listings via Find a Business Broker or view the Business Broker Directory.
It's a good idea to review the business brokers credentials and ensure their licensing is current with the relevant state organisation.
Check Your Brokers License; NSW Business Broker; QLD Business Broker; VIC Business Broker; SA Business Broker; WA Business Broker; NT Business Broker; TAS Business Broker; ACT Business Broker.
There are a number of reputable institutions that business brokers can be part of such as the Australian Insitute of Business Brokers (AIBB) or the Real Estate Institute for your state such as REINSW, REIV, REIQ, REIWA etc. Check if your potential broker is part of any of these groups.
- Ensure they know your industry
Experience is all well and good, but the broker must have worked in your market. Having an in-depth understanding of your business, the pain points for potential buyers and an understanding of the technical aspects like business equipment is valuable knowledge. It will make for better communication and will help ensure a smoother sale. There are business brokers who are generalised and work across multiple industries and those who specialise. It's important the broker you look to engage, has worked with businesses in your industry.
>> View Businesses For Sale by Industry
- Understand what marketing tools they use
Finding a qualified buyer can take time, even for an experienced business broker. The effective ones will use a variety of tools that are best suited to your industry. This could be email lists, online marketing, local newspapers, social media, and trade journals. There are business for sale websites such as Bsale that target potential business buyers, your broker should be well represented on all the major websites as they drive a lot of enquiries. Ask your potential broker what tools they will use to sell your business.
- Don't underestimate interpersonal skills
Finding a broker who knows your industry is great, but do they have that X-Factor to get top dollar for your business. Do they communicate well? Are their negotiation skills on-point? Can they close a deal? Will they take care of your business? These services are intangible, and you'll only learn whether they have what it takes by taking the time to talk with your broker as well as past clients. Repeatedly, industry experts will say, that a good business broker will care for the clients whilst holding their hand and navigating through the sales process, it's not like selling a car or a house. There's a lot more involved in a business sale. It's about finding the right fit.
10 Questions to Ask your Potential Business Broker
- How many similar businesses have you sold?
- How much do you think you could sell my business for?
- What can I do to increase the value of my business before going to market?
- How many businesses are you currently selling?
- How many businesses have you sold in the past 3 months?
- How long do you think it will take to sell my business?
- What websites are you currently advertising on?
- What professional organisations are you part of?
- What are your fees and marketing costs?
- Do you have a previous client I could chat with about your services?
Selling a business takes an average of 6 to 9 months. It's a long journey so choosing a professional business broker that you're comfortable working with and who has the required skills is crucial. As a motivated seller, we suggest visiting our “find a business broker” section to access a huge range of business brokers in Australia. More than just a directory, you can search for specific service providers that fit the profile you're looking for. Selling a business can be a stress-free experience with the service of a top-notch broker and Bsale will provide you with a platform for finding the perfect match.
Want to find a suitable business broker? Find a Business Broker
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Frequently Asked Questions
What does a business broker do?
A business broker is a licensed professional who is usually engaged by a business or franchise owner to assist them in selling their business. Initially, a business broker will perform an assessment of the business and recommended any preparation that is required to achieve an optimum sale price. They will then prepare a market appraisal for the business and determine a price guide. If the owner engages the business brokers services, the broker will continue to prepare the business for sale. This will include roles such as; determining the best sales strategy, creating marketing materials, promoting the business for sale; fielding buyer enquiries, engaging in negotiations, connecting with allied professionals such as solicitors, accountants, finance brokers and basically guiding the seller and buyer through to settlement.
A business broker may also assist in a number of other areas such as; assisting buyers find opportunities, assisting with due diligence, guiding mergers and acquisitions, business coaching and business valuations.
How do I find a business broker for my business?
Bsale has developed the business broker matching service, so we can connect you with a business broker who has experience in your location and/or industry. We work with over 500 business brokers in Australia and are well-connected within the community. We have data on who is actively selling similar businesses, sold recently, won industry awards, and more. Bsale wants to help business owners to exit and sell, and making the right connection is important.
Does a Business Broker need to be licensed?
Yes. In every state of Australia, a business broker must be licensed to operate. 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 in your state.
How does Bsale work with Business Brokers?
Bsale has been working with business brokers since 2000. Bsale is a business for sale platform that showcases thousands of businesses for sale represented by business brokers. We are proud partners of the Australian Institute of Business Brokers (AIBB) and have strong connections within the business broking community.
How do I find a good business broker?
With over 500 business brokers actively working in Australia there is a large group of professionals who can assist you to sell your business. At Bsale we have been working alongside business brokers since 2000 so are well connected. Our Bsale platform gives us insights into the best business brokers and who is actively selling businesses. A good business broker is one who will act with honour and integrity to get your business prepared for sale, advertise it at the right price, actively communicate and engage with buyers, and navigate the negotiations through to settlement. You don't want a business broker who isn't willing to 'work for the sale'.
How do I get a Valuation?
As a business owner it's important to understand the difference between a valuation and an appraisal. Often these two words are interchanged but are very different. The time it takes to perform a valuation and the legal applications are very different from a business appraisal, you can find out more in this article.
If you are selling a business, you may just need an appraisal (aka what the business could sell for in today's market) or you may need a valuation (a comprehensive understanding of the business's financial position). This decision will be based on a few factors, such as the size of the business, how many partners are involved, debts, business structure and so on.
There are business brokers who are registered as licensed business valuers and can provide you with a valuation and appraisal.
How much does a business broker charge?
Every business broker has a different fee structure based on a number of factors. Selling a business can be a lengthy process, some may sell in 3 months, others may take 2 years. It depends on the complexity of your business, whether it is a niche market, your price point, your expectations and whether the right buyer can be found. In general, commissions are 5-10% and there may be additional fees for marketing expenses. A good broker should be judged based on their experience selling similar businesses and not solely on commission rates.