How To Choose The Right Business Brokers To Sell Your Business?
The best way to choose a broker would be to have us shortlist from the hundreds of UK firms to choose one that is best matched to the sector, size, geographical location etc., of your business and fine tune based on fees, fee structures, contractual terms and other criteria you agree with us. Let us match you with a business broker.
However, if you intend to filter brokers yourself, here's how to choose the right broker for your business:
- Decide whether using a broker is right for your business (brokers are not suitable for most businesses!) ... more;
- Make sure you choose the broker, don't let the broker choose you ...more;
- Start with a good business broker directory (not a search engine)... more;
- Remember to include transfer agents, corporate finance firms, M&A advisors and other professionals who go by different names but provide the same service ...more;
- Filter based on sector specialisation and client size ...more;
- Reseach each firm thoroughly looking at, for example, their entries in review and feedback sites; professional memberships etc... more;
- Once you are down to 10 or 20, speak with each and get a copy of their contract plus their fee schedule ...more;
- Carefully review all the terms, do not let them pressure you into a decision ...more.
Decide whether using a broker is right for your business
Business brokers are better suited to the sale of larger businesses. If your business has a turnover of under £1m -2 million per year or a profit of less than £100,000 per year, using a broker may not be the best way of going to market.
Reasoning: The best brokers charge a large upfront fee, usually a five figures sum ...and this is not economical for smaller businesses. More on broker fees and charges here.
Small business therefore, unfortunately, end up with the no-sale-no-fee brokers or the brokers who charge a small advance fee of between a few hundred pounds and a few thousand. This is a very dangerous end of the market. Read more about the exploitative practices of many brokers who operate in this market and how small business owners have ended up badly burned.
No fee (or low fee) often comes with very high risks.
How do you sell a small business? If yours is a smaller business, and you want to discuss better ways of going to market, get in touch.
You choose the broker, don't let the broker choose you
Some of the best business brokers in the UK do not advertise at all! They are so good at what they do that they get a steady stream of clients referred to them from the likes of accountants and other professionals. In fact, and speaking as someone who matches businesses with brokers, I often find that these top brokers are very selective in which businesses they take on!
Some of the worst business brokers, on the other hand, run extensive call centre operations. They call every business owner in the yellow pages to say that they have buyers deperately looking to buy businesses! You've probably already had a call or two from the likes of RTA Business Sales (or their telesales department going by the name of The Business Consultants).
Do not fall for their claims of having eager buyers looking for businesses just like yours.
Selling what is probably your most valuable asset - your business - is not to be undertaken lightly. You need to carefully choose the partner who's going to assist you with the highly skilled task of preparing and presenting your business to buyers, getting the right buyers in, negotiating prices and terms with them etc. It's not something you can leave to the cowboys. Not even if they're doing it for free! Especially if they're doing it for free!
Start with a good business broker directory (not a search engine)
The brokers who appear at the top of Google are not necessarily the best brokers. They are the brokers who've spent the most on Pay Per Click ads or the ones who've invested the most in Search Engine Optimisation.
The best brokers aren't to be found in the first 100 or so pages of the Google results! Some of them don't even have websites.
That's why you need to start with a good business broker directory (see our comments on business broker directories here). Of course no directory will tell you which brokers are the good ones, which brokers are right for your particular business etc., but we'll do that research later.
Remember to include transfer agents, corporate finance firms etc.
Don't forget that many firms providing broker services don't like to be called brokers. They call themselves corporate finances houses, M&A advisors and all kinds of other names. So if you limit your list to just business brokers and business transfer agents you'll be excluding some of the top talent in the UK.
Some of the large accountancy firms have divisions specialising in the sale of businesses. So too with large corporate law firms. Note that many of these can't be found in directories catering for business brokers, corporate finance firms etc.
The most comprehensive database of all UK firms assisting in the sale of businesses is our own database. Unfortunately, we do not make this data public, we use it internally to assist with the broker matching service we provide.
Filter based on sector specailasation and client size
Many brokers will insist that sector specialisation is a non-issue, that selling a business is selling a business and it doesn't matter what industry that business is in.
My take is different. A broker who sells just fish and chip shops, for example, would have over the years built expertise in selling that particular type of business and in overcoming typical objections and hurdles buyers in that industry raise. Further, for every fish and chip shop they've sold in the past they'll have at least 4-5 buyers who expressed interest in the business but did not proceed with a transaction. A broker who deals with businesses in just one sector tends to have a good network of buyers interested in businesses in that sector.
But size is important, too. A broker who deals with £1m - £5m businesses (lower mid-market) wouldn't be best placed to sell a mid market business of, say, £50 million. Similarly, while it may win you boasting rights to claim that Goldman Sachs is representing your business, GS would be completely the wrong type of broker for a business with £2m in turnover.
Research each firm thoroughly
You should have a list of at least 40 - 50 names now. Here comes the hard slog. You need to investigate each one.
You could start with reading reviews at various feedback and review sites. You could also try searching for each broker's name along with terms like "complaints" and "scam" to flush out articles, blog posts and forum threads complaining about the broker in question.
Sites like CEBTA.org are also good sites to visit as part of your research.
When verifying membership of professional bodies such as the International Business Brokers Association (IBBA) etc., do not assume that membership of a professional body is a green flag you can follow blindly. You need to verify what it takes to become a member of that body and/or whether it is given easily to anybody who comes up with a few quid for the rights to use their logo.
Once you're down to 10 or 20, speak with each one
Now that you're down to the last few, you can afford to call them and/or meet with each one. Let them pitch for your business. Take notes. Make no commitment.
While they'll be keen to shove fancy brochures in your hand, they'll be less forthcoming with a copy of their contract (engagement letter) and fee schedule. Insist on a copy of those documents as well ... and have them properly vetted by a competent lawyer.
This cannot be emphasised enough. Some of those contracts look quite innocuous, but they've been worded to protect the broker's interests, not yours.
Carefully review all the terms, do not let them pressure you into a decision
Remember to never be rushed into a decision. Something this important can always wait a few days while you mull it over and/or get expert opinion.
Conclusion: If you wish assistance with finding the right broker, see what we can do for you. Apart from matching you with the right talent for your business, our service also saves you significant amounts in broker fees (far in excess of what we charge), keeps your potential sale more private, gets you better terms than you could get yourself, improves the price you obtain for your business and reduces the time it takes to find a buyer. Read more abour our service here.