Choosing The Best Business Broker
Buying a business today is an involved and complicated process requiring expertise in many different areas (i.e., legal, accounting, tax, business valuation and due diligence). With thousands of businesses available navigating your way to the right one can be an arduous task. At a minimum, a qualified business broker can greatly facilitate find the right business, especially if the broker is well acquainted with your purchase criteria.
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Buying a business today is an involved and complicated process requiring expertise in many different areas (i.e., legal, accounting, tax, business valuation and due diligence). With thousands of businesses available navigating your way to the right one can be an arduous task.
ness Broker can be a very effective tool to identify, locate, screen and value each targeted business and thereafter, in obtaining financing, negotiating the purchase, coordinating the due diligence and supervising the preparation of all transaction documents through the closing.
In the event you as the buyer attempt to purchase a business without the aid of a broker, realize that the listing broker represents the seller who pays his or her commission. Since most listing brokers will ordinarily not do anything to jeopardize a sale, you cannot rely on the seller’s broker to advise you objectively. Never lose sight of that fact!
For most published listings, the listing broker will “cooperate” and “share” the listing, and the commission, with the broker hired by the buyer. In this case, it will not cost the buyer any fees or commissions to obtain exclusive representation.
Once you decide to hire a business broker, seek out a competent professional. The vast majority are unprofessional and quite dysfunctional when it comes to understanding the transaction, valuing the business and providing customer service and support. Furthermore, most business brokers have never owned or even purchased a business or professionally represented or counseled business owners. In California, one need only become a licensed real estate broker to sell business opportunities.
At a minimum, a qualified business broker can greatly facilitate find the right business, especially if the broker is well acquainted with your purchase criteria. Although there are many business listing services, some brokerage firms have software programs that can consider your purchase criteria, investment amount, owner benefits and other factors and produce a more focused and narrow search (see: http://www.qbsnet.com/buying-a-business.php). This can be extremely important. As you will soon find out, unlike purchasing real estate, evaluating a business is a very time consuming process. Therefore, it is important to apply your resources effectively.
So how do you go about finding a good business broker? Our Quantum Business Solutions Network professionals have listed a few essential ingredients in your search for a competent business broker (for a description of the full range of business broker services offered to California business buyers and sellers, please visit http://www.Qbsnet.com).
Before you sign an Agreement
The best brokers are affiliated with accredited Associations relevant to their state and profession. For example, in the state of California, the best business brokers are registered with the California Association of Business Brokers (http://www.cabb.org) and the International Business Brokers Association (http://www.Ibba.org).
Make sure the California business broker is qualified to provide competent representation. The firm or the individual should have their own website which is regularly updated with news, articles and business listings. Excellent contact details, company profile as well as having well qualified professional such as accountants, attorneys, etc.
The business broker should clearly attempt to understand your exact purchase criteria, investment objectives, background and experience. This will ensure that the broker is not wasting your time and missing viable business opportunities in the marketplace (a good business brokerage firm will maintain its own network of listings, many of which are not “published” and unavailable to the general public). In addition, a competent business broker will continually narrow the focus of the search based upon your constant feedback. There should be a mechanism in place to accomplish this task. Quantum Business Solution Network employs uniquely designed business buyer software which constantly narrows the search and identification process.
Take some time before committing to a particular business broker and see how responsive he or she is at the outset. Attempt to inquire about the nature and scope of the services offered. Determine if they respond in a timely and comprehensive manner.
The best business brokers are excellent communicators and always respond in a timely manner (in business purchase and sale transactions time kills deals) and often serve an indispensible element toward ensuring the flow of the transaction toward a smooth closing.
The listing agreement/contract should include:
- length of time they will be representing you (6-12 months is typical)
- the type of the agency relationship offered by the broker (you want the broker to serve as your “exclusive” agent)
- the manner and payment of the broker’s compensation
- the nature and scope of the brokers duties
About the Author
Quantum Business Solutions Network is a full service Southern California business consulting and licensed brokerage firm. Quantum Business Solutions Network is comprised of professionals that combine valuation, financial, marketing, legal, accounting, tax and transactional structuring expertise to initiate, execute and consummate business acquisition and divestiture transactions.
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