By Walker Smith, Business Intermediary
Confidential Business Intermediaries/The CBI+Team
You’ve finally reached that point. The point where it’s time to cash in on what is likely the largest investment of your life. You have some idea of what it may take to sell your business, but you’ve decided to step aside and let the experts insure your success. Here are 5 things to consider when selecting the right business intermediary to sell your business:
1. True experts are quick to listen and slow to speak.
We’ve all heard it before, “Be quick to listen and slow to speak.” But why is this an important quality when choosing the right intermediary to sell your business? As Dale Carnegie said, “You can make more friends in two months by becoming interested in other people than you can in two years by trying to get other people interested in you.” Your intermediary is more knowledgeable about the business market than anyone else, that’s one of the reasons you came to him/her. Though be aware, there is no bigger red flag than a business intermediary who is ready to take your business to market without first knowing why you want to sell, your level of motivation, and your plans following the sale.
2. A business intermediary who harnesses the power of the phone win.
You’ve chosen a company that boasts a huge database of buyers, national network, and the latest CRM (Customer Relationship Management) system. All of which are keys to a strategic marketing campaign, but in the business of selling secrets nothing is more powerful than a personal contact. Your business intermediary has a daunting task to sell your company without initially revealing its identity to insure the highest level of confidentiality. Good business intermediaries understand there are few shortcuts to a successful business sale, and that most sales started with a good old-fashioned cold call. The M&A world and business sales alike are one of the few remaining industries where telemarketing is often the single most effective marketing tool when sifting through potential buyers.
3. If you feel you are being told everything you want to hear, be cautious.
As a business advisor, your intermediary’s job is to set expectations that are realistic and obtainable to give your business the best chance to sell on the open market. After financial documents, assets, and other important items have been reviewed your intermediary already knows the good, bad, and ugly you may or may not have in your business. As Warren Buffett said, “Only when the tide goes out do you discover who’s been swimming naked.” You may have put a million dollars worth of time and effort into your business but if your business shows a minimal line of profit it’s probably not worth a million dollars. A good business intermediary understands the difference between good will and blue sky and is willing to forego a listing opportunity if realistic expectations have not been set.
4. “My price your terms, your terms my price.”
Your interests are top priority to your broker, but the “best offer” may not always be the right offer. In many cases the terms of a deal can be worth just as much, if not more, than the dollar amount on the table. Quality brokerage firms provide a closing attorney that represents the deal and can adopt contingencies that are satisfactory to both parties. For better or worse there is a fair sales price and logical set of terms for anyone trying to sell their business. The top earning business intermediaries can identify the right combination of these to keep negotiations from going south and ultimately get deals done.
5. The successful sale of your business is highly related to the relationship you have with your intermediary.
The decision to sell a business is typically not an easy one. Often, business owners must reaffirm their decision to sell even after an engagement has been signed. If you don’t feel comfortable with your intermediary by at least the second meeting, it’s probably time to look elsewhere. A good business intermediary should be trained to walk the line of business and relationships with no problem. People who enjoy working for people they trust, and with a faithful seller/intermediary relationship the chances of selling a business improve dramatically.