Making sure that your business broker is on your side is all about ensuring that he or she is providing the right services at the right times. At the same time, it’s important to be made aware of some of the warning signs that will alert you that something is awry, and that you may not be getting quality service. The following guide will help you do just that.
Services that You Should Expect
One of the reasons that business brokers are valuable to business owners who are selling, deals with business-for-sale listings. Business-for-sale listings are usually hard to find, which is why you need a broker. These listings give your company direct exposure to buyers who are looking to buy a line of business like yours within a preferred industry. This means that your business might sell quicker through these specific for sale listings. Keep in mind that listings like these are only available in some states; however, your broker should enlighten you about your particular state and best practices for listings.
Another important service that a good investment broker can do for you is prepare the teaser. The teaser sounds simple, but it is actually a complete two-page summary of the business and all its attributes. What you should understand is that this summary is very specific. It needs to make the business sound fresh and one-of-a-kind. The teaser also stays relatively confidential; and though it does reveal certain details regarding the sale, your business name and location is not.
A third service that your business broker should be providing is the CIM or the Confidential Information Memorandum. This is associated with the teaser, but it is only released when the interested buyer signs confidentiality papers to keep the details of your business under wraps. The information in a CIM needs to include a description of the business with details regarding operation. It also needs to include all possible opportunities related to the market.
The CIM is also responsible for giving a possible buyer a detailed look at the financial history of the business as well as projections for the future. Moreover, it highlights the details of the deal, as well as receipts for expressions of interest. And that is just some of the information that is prepared by a good business broker.
Professional brokers are responsible for a lot; and good ones will provide information on business valuation and appraisal, tips to help you prepare to sell, as well as prepare all paperwork and legal notifications well before you actually put it up for sale. Unfortunately, it is also possible that a business broker is not doing his or her job. This is why you also need to know the signs of a bad broker.
One tell-tale sign that your business broker is not on your side, is if they refuse, or delay, showing printed marketing material. All brokers usually prepare summaries for all the businesses they have represented. Just ask them for a few that resemble your business to see the kind of services that you might expect from them.
Likewise, look for customer reviews, ratings, and broker certifications. Brokers who have not obtained their CBI or Certified Business Intermediary, may be a red flag. This is a professional certification that is given to brokers from the IBBA or International Business Brokers Association.