Hiring a Broker
What type of broker should I select?
In this interview, we discuss exit planning, business appraisals, valuations, normalized salary, working with a CPA, Business appraiser, and Attorney, and more. Dr. Horton has owned, operated and started several high tech businesses in the past twenty-five years and has many years of experience performing forensic accounting on seller’s financials, analysis of financials during due diligence phase of acquisition and business valuations.
"You will need a broker who can give you his full attention and will provide a customized consulting service as well as experience in selling and buying businesses." Preferably, get a broker who only has a few businesses listed so he or she has the time it takes to sell your business.
The broker should be someone who should has owned several businesses and who has sold his or her own business and is certified as a business intermediary. If possible, your broker should also have certification in business appraisals or extensive experience in valuations. The broker should have extensive experience performing financial analysis and be good with details – the numbers will ultimately determine whether you will sell your company or not.
Selling your business is not a MLS activity. It must be confidential, there should only be a broker, the buyer and the seller involved in getting a deal done. All three must work as a team to reach an agreement that everyone can live with. The more people that are involved, the more difficult it will be to reach a deal and to maintain confidentiality.
Should I hire an intermediary such as an investment banker or business broker to help sell my business?
Brian D. Bornino, CPA/ABV, CFA, CBA is a nationally recognized thought leader in the business valuation and ESOP consulting industries. He has led, managed, or completed nearly 2,500 valuation engagements during his career, with clients ranging from over $1 billion to under $1 million. He has been involved with over 500 ESOP-related engagements, including ESOP valuations, transactions, and implementation consulting. Mr. Bornino is a frequent speaker and author on valuation-, ESOP-, and transaction advisory-related topics.
"Many business owners make the mistake of thinking they can sell their business without the help of an investment banker or business broker." While these intermediaries often command a high fee (oftentimes 2 to 5% of a transaction price), good investment bankers are worth the investment and will pay for themselves by (a) correctly positioning the company for sale and presenting the company’s advantages in a comprehensive offering memorandum, (b) conducting an in-depth search process to identify as many likely buyers as possible, (c) helping create an “auction process” whereby buyers are competitively bidding for your business, (d) running a professional and smooth managed sale process, and (e) ultimately achieving a higher sales price than could typically be achieved by business owners on their own. Various studies have shown that on average, businesses that are sold through investment bankers will fetch higher prices, with an average difference around 20%.
Read the Full Interview