Save thousands of pounds - motivate business brokers to do a better job at a lower price
It's not cheap to hire a competent business broker (business transfer agent) to sell your business.
In fact, it'll cost you between 5% - 10% of your selling price (read more about business broker costs & fees). Yes, in many cases you'll be giving away 10% of the entire value of your business!
But there's plenty of scope to save thousands if you know how. And to actually get an even better service at the lower price.
1. Work with your broker rather than against him
I know it sounds obvious but one of the biggest complaints business brokers have is business owners not being responsive enough.
At the start the broker will need information - copies of your accounts, details of company structure and ownership, outline of what the company does, sales and revenue forecasts, a copy of your lease and other data. Later he'll have other requests.
Provide all requested information as early as you can. Brokers love dealing with vendors who are proactive and quick to respond. It makes their job easier, helps them find you a buyer more quickly and they see you as the type who'll be able to satisfy buyers' demands for information when the time comes. And this is essential if you ever want to close a deal.
Vendors who are tardy with broker requests will likely be slack in responding to buyer enquiries as well and as a result lose high quality buyers whom the broker has spent much time and energy finding.
No sale = no success fee for a business broker.
The better you are at responding, the more certain those success fees look to the broker and the more incentive he has to work hard on your behalf.
2. Be professional at all times
It's not unusual for a prospective buyer to make an offer that the seller finds insulting. That's life. Sometimes buyers "try it on".
Even if you have no wish to deal with a particular buyer, stay polite and professional. You may have no further use for that buyer, but the buyer may be "a person of value" to the broker. He may have done business with the broker in the past or may choose to use your broker in the future. The broker would certainly keep him on their mailing list in case other businesses like yours come up for sale.
You have nothing to gain by taking personal offence to anything a prospective buyer has said or done. If the relationship with a buyer has broken down irretrievably you could instruct the broker to decline his candidature and take the buyer off the list rather than engaging any further with that party.
3. Use advisers who are deal professionals
Where you need accountancy or legal advice, use professionals who are experienced at M&A deals. A divorce lawyer or a tax accountant may be good at what they do, but this is a field that calls for specialists.
Non-specialists take longer, make more mistakes and can often be frustrating for a broker to deal with.
Bear in mind that your business broker is your project manager, he's liaising with all these parties to bring the transaction together. It's a tricky enough job without having to cope with professionals who are finding their way around the type of "corporate finance" work involved here or the intricacies of indemnities and warranties in the Purchase/Sale Agreement.
Even better if it's an accountant and lawyer with whom the broker has had previous dealings.
4. The power of the introduction
The worst decision a vendor can make it to sign up with a broker who cold called them or otherwise approached them pitching his/her service.
Selling what's probably your biggest asset requires a very careful and cautious choosing of a partner (and getting that partner's contract vetted by a lawyer before signing).
It's worth spending time and money to research a fair few business brokers before deciding on whom you're going to instruct.
When you've made your choice of broker you'll be better off being referred to the broker than approaching the broker directly yourself. You can be referred by an accountant or a business adviser or someone like me.
An adviser who's in a position to send the broker further business in the future is a contact the broker wants to keep "on side". The broker has incentive to take better care of you to ensure any feedback you provide the adviser doesn't have a negative impact on future referrals.
The larger the number of clients the adviser is in a position to send the broker, the greater the incentive for the broker to take care of referred clients. As an adviser who frequently refers clients to brokers, I've always found that clients I've sent get priority on speaking with someone who can answer their questions, get dealt with by a senior figure in the broker company, usually a director himself, and even get better terms when they sign up with the broker.
While I normally charge a fee to match clients to the business broker best suited to handling their specific business, if you've already chosen the broker (or business transfer agent) to represent you and don't need any assistance or advice, I would be pleased to refer you at no charge. Get in touch via my contact form with your details and the name of the broker you want an introduction to and I'll set it up for you. And, no, I won't try to sell you anything!