Choosing the Right Business Broker for a Successful Investment
While it’s true that this is an unregulated industry, there are criteria that should be looked for when choosing a business broker. One vital aspect is that is that the broker have professional training and certifications from groups such as state brokerage agencies and the International Business Brokers Association. It’s also important to realize that a college education can play a large part in training as well, classes such as accounting and finance. Although these types of classes are a help the most important aspect for a broker is to be able to analyze and give prudent council to prospective buyers and sellers.
The sad fact is that many, not all, but many ‘business brokers’ simply don’t have the proper training or credentials to be a ‘business broker’, as a result the potential risk to business sellers or buyers is a considerable one. The good news is that there are steps that can be taken in order to help a potential small business buyer find both a competent broker and successful small business opportunities. With this in mind here are some pointers that will help the potential business buyer find several small business opportunities.
The first step is really a simple, although very much overlooked, step; references. When considering enlisting the help of a business broker, simply ask that they submit three references on former clients who purchased businesses of the same size range that you’re interested in. Here is a list of some of the questions that you will want to ask:
1. Did the broker professionally handle the steps to closing?
2. Did the evaluations, price and opinion fall in line with the final price quote you received?
3. Was the broker discreet and confidential in how he handled the transaction?
While these questions should be obvious they are often overlooked.
Although many brokers work alone from their home, it’s still important that they have assistance when they need it. Usually, a broker has more than one transaction that they are working on When it comes to finding the right business for sale its important for a broker to have others who are familiar with the deal, especially if the broker is unavailable. This is why it’s vital to meet and be familiar with the broker’s assistant team in order to feel more confident in the team’s confidence.
Once a potential lead has been found then the broker should follow a protocol of acquiring a written listing for the business for sale or the franchise for sale. The first order of business is that a marketing package should be drawn up, this will give the prospective buyer an outline of the important points of the business. Given that this package will be something that is followed throughout the transaction its important that it have a physical appearance as well a logical presentation that can be easily understood. This is why it might be a good idea to ask the broker to see a previously prepared marketing package in order to understand the one that will be prepared for the business or franchise for sale for your potential consideration.
Bill Whitehurst has been engaged as a Texas business broker for the past 15 years and has over 100 successfully closed transactions.