Peter  Siegel

Article Summary:

What you need to know to help you choose the a business broker to help you sell your business.

How To Choose A Business Broker

1. Know up front what your expectations are in a business broker who will be selling your business. Make sure you discuss and convey those expectations to the business broker you select. Direct and open communications about expectations and other issues with your business broker is critical in selling your business.

2. Ask the business broker how they are going to advertise and get the word out about your business for sale. Make sure they allocate an adequate budget for advertising and marketing to sell your business. It takes approximately a budget of $1000-$3000 in advertising and marketing costs to get successful exposure in the marketplace and reach the best qualified business buyers.

3. Have the business broker determine the valuation of your business before you sign a listing agreement. Ask them about a cash price vs. a price with terms involved. This is very important since over 70% of small businesses never sell - usually due to - too high of price for the marketplace or unrealistic terms and conditions on selling the business. There are many ways to structure a deal - you need a business broker who can be honest with you and discuss these variances with you.

4. If the sale of your business is confidential - you need to know how the business broker is going to keep the sale of your business quiet while still marketing it. Make sure the business broker is using a professional Confidentiality Agreement form for your protection and keeps these on file at all times.

5. Make sure the business broker you select has prepared your business for marketplace - are all the financials and tax returns in good order and understandable. Do you have all documents ready for review like your lease agreement, equipment leases, and contracts with vendors, etc? Time kills deals and if your business broker doesn't have it together, business buyers will leave fast for another business for sale!

6. Make sure the business broker is comfortable with selling your type, location, and size of business. It amazes me to see how many business owners pick a business broker quickly out of the yellow pages without doing much homework on them. This is probably one of the most important decisions you will make for your business - make sure you pick the right business broker or agent to sell your business.

7. Returning phone calls in a timely manner is critical! Make sure the business broker you select is good about getting back promptly to potential buyers. You would be surprised how many business brokers delay calling back buyers - remember the sale of your business is in "competition" with the sale of thousands of other businesses - you want to make sure your business broker is responsive in getting back to potential buyers.

8. Time kills deals. Make sure the business broker you select is responsive in getting things accomplished and moving things along. Deals tend to go south when parties aren't moving forward on a deal at all times.

9. Constant and continuous communication with your business broker is important - make sure you let your business broker know what your expectations are for letting you know how things are progressing (i.e. Once a week updates, only call when something is going on etc. - its up to you, however we think it is important that at least weekly dialogues between seller and business broker is important so you can see how things are moving forward).  Find out how many buyers have responded, and any feedback on all buyers who have expressed an interest in your business for sale.

10. Make sure you pick a business broker who spends the needed time on your business for sale. Some business brokers take on too many listings knowing that some may not sell - it's a numbers game to them. You need someone who understands your business, what your expectations are, and who can properly get your business sold!

11. Businesses on average typically take 6 months - 2 years to sell. If your business broker does his job correctly (and utilizes the TIIC Method of selling a small businesses) your business should easily sell within 3 to 6 months!

12. The listing agreement/contract should include:

  • length of time they will be representing you (3-12 months is typical)
  • how they are going to advertise and market your business for sale (get the details and budget)
  • how often they should be contacting you about buyers and deal updates (at least weekly)
  • what happens when the agreement expires - with all the buyers who have signed confidentiality agreements during this period
  • what happens if you find a buyer - what is the commission then, will they cooperate with other business brokers/agents on your listing (this opens the market to more buyers), etc. - and get it all in writing so you both know what the expectations are!

Peter Siegel, MBA is a nationally known consultant and author - with over 25 years experience on the topic of selling, buying, and niche financing (the purchase of), small to mid-sized businesses. His latest book, "Businesses For Sale ? How To Buy Or Sell A Small Business" is available online and in bookstores. In 1994 he founded BizBen.com and later USABizMart.com ? two of the leading business for sale, business opportunity, & franchise for sale related websites, and he presently writes a syndicated small business blog at and produces a Podcast which focuses on issues, educational events, and information related to buying and selling small to mid-sized businesses.

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