It is very important that you thoroughly interview your business broker before signing an agreement with him or her. FYI – please do not ask for references as part of the interview as a good business broker protects the confidentiality before – during -and after the sale. IF THEY PROVIDE REFERENCES then be scared because confidentiality is not important to them.

10 Recommended Interview areas to discuss with the business broker and the answers to look for…

1. How does the business broker protect your confidentiality...

• Non-Disclosure Agreement preventing buyer for disclosing any information given to them

• Disclosure Notice where the buyer sign off understanding that the broker works for you and not them

• Record Of Showing where the buyer acknowledges that the broker did disclose the buyer your business

2. How does the business broker qualify buyers...

• By relevant experience as this is the first area a lender will inquire about

• By net worth or liquid capital as this is the second thing a lender will inquire about

• By general credit standing as yes the third thing a lender will inquire about

3. How does the business broker market your business...

• Should have an existing business buyer pool in place to market to

• On business for sale services like BizBuySell - BizQuest - BusinessBrokerNet - Merger Network etal

• The use of Craigslist and similar online advertising sources

• They may use some newspaper advertising but that should not be their primary method

• They should also be able to tell you if they have a web site and if it captures buyers

4. Is the business broker fully trained, certified and supported by a reputable source and can they verify it...

• What firm trained them and what training did they receive

• Can the broker provide the name and number of the firm whom trained them

• Can the broker provide a reference to the person supporting him or her

• Is the firm who trained the broker an established firm with a published philosophy

• If the broker was trained by a book or manual - WALK AWAY - consider yourself warned

5. Have the business broker describe their process from beginning to end...

1. Qualifying and getting buyers under confidentiality documents

2. Showing the actual business to the buyer WITH you not sending a buyer to you

3. Showing the financial history of the business and proving the cash flow and price

4. Acting as intermediary regarding any additional information the buyer needs

5. Securing offers out of the buyers to present to you

6. Managing all contingencies between offer and closing

7. Attending closing with you (some states this does not apply)

6. How does the business broker price your business...

• Using a cash flow + assets multiplier same as used by lenders

• WALK IF you hear by sales multipliers, cap rates or comps OR if they base it by what you want - be warned

7. How many listing do the business brokers and their agents take...

• A good broker will not more than 12-15 listings at a time - per agent - so they can focus on those listings

• WALK AWAY IF TOO MANY - the odds of selling are low and up-front fees may be high - be warned

8. Ask the business broker who they work for - you or the buyer...

•  This should always be YOU unless dual-agency is a requirement (certain Canadian Provinces only)

• WALK AWAY if they appear confused by the question as they may not have a clue - be warned

9. Are the business brokers willing to co-broker...

• The should be amenable to co-brokering as long as the other broker has the same principles

•  if NOT then you are NOT dealing with a reputable business broker - you are dealing with GREED.

10. How does the business broker get paid...

• There is no right or wrong answer to this just understand before signing an agreement

• BEWARE of the high retainer fees as this may be their primary source of revenue - they should earn it

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