How to choose the right broker to help you to sell your business
The vast majority of entrepreneurs will only build up and sell one business. It’s a complicated undertaking, often with a strong emotional aspect too. Choosing the right broker to work with is one of the many challenges of the process. We regularly speak to business owners who have signed up with a broker to sell their business but not got the results that they want.
With typical fees of anywhere between £20,000 and £40,000 to sign up and no guarantee of success or even the level of activity you can expect, choosing the wrong broker could be an expensive mistake.
Corporate finance houses and brokers are unregulated so there’s no official standards for them to work to, and it can be very difficult to understand what you will get for your money. It’s also hard to find data on conversation rates and therefore hard to know if the broker is likely to be successful on your behalf. You’re likely to have to sign an exclusivity deal. Terms often mean that a broker can demand a success fee even if you sell your business via a different route.
The triple hit of using the wrong broker
Signing up with the wrong broker for your business can have three big disadvantages. As well as the wasted fee, you are also pushing back the timeline for the eventual sale of your business – possibly by six to twelve months, longer if you persevere with an unsuccessful broker. Finally, the sales process is distracting, and if you are putting your time and effort into a relationship that’s unlikely to prove successful, a lack of focus on running your business could impact its eventual sale price.
Getting it right
We’ve worked with businesses on preparing them for exit for a number of years now and during that time have developed relationships with a number of trusted brokers. We know that they have high success rates. No two businesses and no two sales are the same so depending on the size or sector of the business, we work with or recommend different partners.
If you are thinking about selling your business and engaging a broker, please get in touch. We can have a free and confidential chat and point you in the right direction for your business and circumstances.