You are selling your business, and your friend said to call Bill Broker down the street. After all, Bill Broker has sold commercial buildings, sold some residential real estate, and even did home loans. So, he should know how to go about selling a business, right? Before you hire an advisor, consider asking these very relevant questions. These are the top questions to ask when choosing a business broker to sell your business.
How long have you been selling businesses?
Experience matters. During the sale of a business, there are many “deal breakers” that will come up. Knowing how to handle these situations is invaluable. Your advisor should personally have at least ten years of experience selling businesses. And make sure your advisor personally has this experience, not the company they work for.
What is the size range and what types of companies have you sold?
It’s not important that the advisor has sold a company exactly like yours. Most businesses are unique. They operate differently, the owners wear different hats, they have different leases, and their financial performance and metrics will all vary. But what is important, is that the advisor has experience in the same class of business, and in the same size range. If the advisor has sold delis for an average selling price of $200k, that’s not the same as selling a manufacturing business for $2MM.
What licenses do you have that allow you to sell my business?
In California, a real estate license is required to sell a business. A real estate license doesn’t make much sense when selling a business, but it is a requirement. If you are selling the stock of a company, especially a publicly-traded company, your advisor may have a securities license. Real estate licensees may also sell the stock of a company, with certain restrictions, the biggest being that they are selling the entire company, or majority interest. Selling only a partial interest in a company is much more challenging and requires a securities license. There are many out-of-state brokers who solicit business owners in California. Make sure you ask for their California license information and make sure it’s in their name!
What professional certification, designations, and training do you have?
If your advisor is serious about their profession and wants to keep up with the latest information, trends, lending, etc., they will have a professional designation. Be careful though, because there are many advisors with designations “made up” by their franchise organization, or they weren’t required anything other than paying a fee. While CPAs and other professionals do have designations from their associations, there are just a few that are earned within the business brokerage or mergers and acquisitions associations. The California Association of Business Brokers grants the Certified Business Broker designation (CBB). The International Business Brokers Association grants the Certified Business Intermediary designation (CBI). Additionally, the Merger and Acquisition Source grants the Merger and Acquisition Master Intermediary designation (M&AMI). All three of these designations require the attendance of courses, passing a test, and demonstrating actual deal-making experience. So, look for a broker with one of these hard-earned and professional designations.
Selling a business is unlike any other transaction. Confidentiality is critical, experience matters, and the advisor you hire is extremely important. There is no effective Multiple Listing Services(MLS) for businesses in California. So do yourself a favor and ask these questions before you choose a business broker/advisor to sell your business.
Are you looking to sell your San Diego business?
Contact Vanguard Resource Group for expert assistance! Our expert staff of business brokers will set you up for success and guide you through the process of selling your San Diego business.