How to Pick the Right-Best Business Broker to Sell Your Business

After deciding to sell your business, the next step, and critical decision, is who will represent you in the sale of your business and guide you through the process.  Your CPA will be there for financial advice, and your attorney for legal advice, but who will sell the business, structure the deal, handle negotiations, draft the purchase agreement, and guide you through the Due Diligence, SBA or other financing, escrow, and closing?  All of this and more is the role of your professional Business Broker.  

Obviously, your Business Broker will play a critical role in the sale of your business.  Your choice of Business Brokers will likely determine whether your business sells or not, how the transaction goes (smoothly or difficult and frustrating), the price you realize, and even your cash at closing (more on this below).  

So how do you choose the right business broker, what should you expect from your broker, and what are the steps in selling your business?  

10 Steps in Choosing the Right-Best Business Broker to Sell Your Business & What to Expect from Your Business Broker

1. Industry Experience Industry experience pertains not only to experience as a business broker and in business sales transactions but also experience with transactions in your specific industry.  Selling a manufacturing or construction-contractor business is vastly different from selling a small mainstreet business. 
   At Pacific Business Sales we specialize in manufacturing, construction/contractor businesses, industrial businesses, e-commerce, and healthcare. We do not sell Mainstreet retail, B2C-consumer businesses, or food service businesses.
   • Manufacturing companies
   • Technology companies
   • Construction-Contractor businesses
   • E-commerce
   • 3PL & Distribution businesses
   • Healthcare
2. No Up-Front Fees, “Marketing Fees”, “Valuation Fees”, or other advance fees You should not pay any upfront fees on the sale of a small to midsize business.  It is customary for Business Broker commissions to be paid through escrow at closing and up-front fees are rare and generally not required. 
   Pacific Business Sales does not charge any up-front fees for the sale of your business and we offer a Free Market Value Analysis as part of our services (see below).
3. Market Value Analysis or Opinion of Value Your Business Broker should provide you with a Market Value Analysis or Opinion of Value before you sign the representation agreement. 
   At Pacific Business Sales we use Peercomps for our  Market Value Analysis.  Peercomps is a professional business valuation software that includes sold comparable sales data from the SBA transaction database.  Many brokers use standard earnings multiples which are not necessarily appropriate or accurate for your business.  Earnings multiples vary by industry and business size and are NOT a one-size-fits-all all figure. 
4. Tax Strategies Getting the maximum value for your business is great but the thought of giving up nearly half of that to taxes makes every business owner cringe. 
   There are several tax strategies available that can defer up to 90% of the taxes from the sale of your business and substantially reduce your taxes.  We work closely with CPAs and tax strategy financial advisors specializing in tax strategies for the sale of businesses that will meet with you to discuss the best tax strategies for your particular needs.
5. Marketing One of the most common questions business owners have is “How do you find buyers?”.  Most inquiries come from advertising on business-for-sale websites like BizBuySell.com and BizQuest.com etc. 
   Business for sale websites have thousands of businesses for sale, but how does your business stand out and get found? At Pacific Business Sales we feature all of our business for sale ads placing them at the top of the business for sale websites with expanded headlines/titles.  We also send email blasts to our buyer list of over 3,000 active buyers and 300 Private Equity Groups plus the BizBuySell buyer email list. 
6. Confidential Information Memorandum – Company Prospectus The Confidential Information Memorandum (CIM), aka Business Profile, is the marketing brochure or prospectus for your company.  It is a confidential document and only sent to prospective buyers after they have signed a Confidentiality Agreement (NDA), completed a Buyer Profile which includes information on their financial position and background, and have been screened. 
   At Pacific Business Sales our CIMs are typically 30 to 40 pages, sometimes more, and very comprehensive.  Our goal is to provide the Buyer with a complete picture of the business so they can determine early on if this business is a fit for them.  We have found this motivates buyers that are well-suited and interested in your type of business and of equal importance it filters out buyers that are not a fit. 
7. Buyer Screening Good marketing will drive lots of inquiries about your business.  That’s the great news, but as a seller, it can become frustrating to meet with a parade of buyers that are not serious about your business, not to mention the time it consumes.  We meet with each buyer to discuss your business and answer the initial questions about the business prior to setting up a meeting with you.  We have found this reduces the number of seller meetings because in our initial meeting some buyers discover the business is not a fit for them after all and sometimes we find that the buyer is not qualified for the business.  Of course, you will still have buyer meetings that do not result in an offer from that buyer, but it does reduce the number of these meetings.
8. Professional Associations Professional trade associations such as the California Association of Business Brokers and IBBA (International Association of Business Brokers) provide professional training and resources to Business Broker members.  Your Business Business Broker should be a member of the IBBA and local professional associations such as CABB. 
9. Industry-standard purchase agreements and forms Your Business Broker should use industry-standard forms such as the CABB purchase agreements and disclosures for the sale of businesses or the AIR (Association of Industrial Realtors) purchase agreements and disclosures for the sale of commercial buildings and real estate.  Some Business Brokers use “In-house” forms which may or may not have been written by an attorney and as a client, you have no way of knowing if these forms are adequate or sufficiently cover the legal aspects of your transaction. The problem with in-house purchase agreements often isn’t what’s in them, it’s what’s not in them.
10. Testimonials and reviews The experience of actual past clients is a great way to see how a Business Broker works with their clients and their results.  At Pacific Business Sales we are very proud of our numerous customer reviews from buyers and sellers on Google and our website.  

You’ve invested your time and money to build your business, to realize the maximum value for your business you’ll need the best business broker representing you in the sale of your business. You also want to beware of scams and rip-offs when selling your business. We are business brokers in Orange County that you can trust.