When it’s time to sell your business, you want to make sure you know how to negotiate and handle the selling process. Without the right knowledge and preparation, you can risk selling for too little or being manipulated into terms you don’t want. To protect themselves through the process, many sellers turn to a broker to represent them and fight for their best interests.
At Acquisitions and Funding Services (AFS), we help owners sell their businesses with less stress. We also provide financing for those who need quick resources to grow their businesses. We’ve heard many of the concerns and questions owners have when they call us or start the selling process. While we can’t speak for every broker, we can share how our managing owner Rory Russell handles the following things. We can also share what experience he brings into each sale.
Browse ten important questions to ask a broker when selling a business below. Or, contact us directly to have a conversation specific to your needs!
1. What is the broker’s experience and track record with similar businesses?
This is an important question to ask any broker when considering working with them. It can give you more information to use to research your broker independently. It can also help you discern if he has the experience to guide your company through a sale. The more experience, the more negotiations the broker has navigated successfully. Having experience with businesses of a similar cash flow model or customer type (B2B vs. B2C businesses) will also show the broker knows how to represent the value of your company.
2. Does the broker specialize in any specific industry sectors?
Another one of the early questions to ask a broker when selling a business is if he has experience working within specific industries. This question is important for those selling either a fire protection company or security integration business. These industries are very different from others, have tight-knit networks of vendors, and specific regulations to follow. A broker who doesn’t understand these things can undervalue your business, or pair you with a buyer that is not suited to your company.
Rory Russell has over thirty years of experience specifically representing owners in the fire protection, security integration, and commercial alarm systems industries. This makes him uniquely qualified to evaluate your fire protection company before sale and accurately negotiate for the best price with potential buyers.
3. How will the broker promote my business for sale once we start working together?
Understanding how the broker will find buyers and promote your business is important to clarify upfront, especially if you need a certain level of confidentiality throughout the selling process. Some brokers may use very public methods of listing the businesses they represent. Others may have standard marketing initiatives they use for all their clients, regardless of your own hopes for the sale. Brokers may use anything from email blasts and social media to direct phone calls to potential buyers to generate interest. Make sure you’re comfortable with your broker’s approach and clarify how much information he is at liberty to share during the promotion stage before you begin working together.
4. Does the broker have any potential buyers already?
This is one of the great questions to ask a broker when selling a business! Finding out if a broker already has potential buyers tells you a lot about his connections in your industry and his reputation. If he already has warm connections, you may be able to start early conversations with some shortly after you begin working together. This can help you identify weak points in your business early, and give you time to work on them as you continue discussions with buyers. It can also indicate that the broker is well-established. That will make it more likely you have a smooth and professional experience.
5. What timeline does the broker expect for a successful sale?
Any broker will tell you that the sale of each business is unique to its specific circumstances. But, he should be able to give you some rough estimates to help set your expectations and prepare you for the process. Knowing a general timeline will help you plan your next steps, manage employees’ questions, and understand what you can do to keep things moving. It may also help you determine if the broker is realistic in his expectations of how quickly he can bring buyers to the table.
6. Is there a plan for selling my business quickly at its maximum value?
This may sound similar to the earlier questions to ask a broker when selling a business. But, this question is important because it shows the broker how serious your interest is in selling. If you make it clear from the beginning that you are interested in a quick sale for a high value, he can help you prepare specifically for that outcome. He can also tailor his efforts to find buyers to these requests. Some fire protection company owners want to go a little slower to give themselves and their teams time to adjust. Others are willing to sacrifice dollars to find the best fit for their companies. Make your own ideal timeline and price clear to him, so he can tell you how he will work to meet them.
7. Does the broker have a network that can be used to identify prospective buyers?
This is another question that digs into the broker’s experience and reputation, especially in your industry. A broker who already has a warm network and strong connections will be able to move through the negotiation process faster and easier. Buyers who have already purchased from him in the past will know how to work with him and be able to skip the formalities that can make for a slow start. It’s a good idea to ask if you can speak to any of the sellers he has represented in the past. This will also help you gauge where he stands in your specific industry and form an idea of how he can bring in better offers for your company.
8. How does the sale process work?
This is one of the questions to ask a broker when selling a business for which you need a clear and concrete answer. Ask him about the specific steps in the selling process. There should be a straightforward progression to the steps. They should be strategic and move at the general pace you want. There should also be plans in place for troubleshooting along the way. Sometimes a selling process can reach advanced stages and fall apart or not go the way you expect. Within the broker’s process should be an action plan for finding a new buyer quickly if this happens. There should also be reassurances that your interests will be prioritized throughout the sale, even if it takes a few buyers to come to the right conclusion.
9. What are the costs associated with selling my business and working with the broker?
Like realtors, brokers are typically paid a percentage based on the final sale. Different brokers may have different percentages. Some may expect the buyer and/or seller to pay additional fees. There may be travel expenses or other costs to consider, depending on how the broker works. Don’t be shy about asking these money questions in the beginning! You want to make sure you understand how much of the final sale amount will go into your pocket. You also want to have time to plan for any expenses you will be responsible for paying the broker along the way (if any).
Remember: the broker earns more if he sells your business for more, so this is an arrangement that works in your favor! But, understanding the exact figures and costs can help avoid unnecessary surprises or disappointments.
10. Who will be responsible for negotiating with potential buyers on my behalf and how involved do I need to be in this process?
When compiling questions to ask a broker when selling a business, you want to ask what your and the broker’s roles will be throughout the sale. Does the broker work for you himself, or does he have others in his team who handle negotiations or participate in the process? Do you have to be involved at every point if you don’t want to be? Are you welcome to be heavily involved if you prefer? Some buyers want a broker to take care of as much as possible, while others want to act more in partnership with the broker throughout the sale. Ask these questions early in the process so you are certain to choose a broker who handles as much, or as little, as you want.
More Questions to Ask a Broker When Selling a Business? We Have Answers!
When it’s time to sell your fire protection company, you want to make sure you are offered the best price under the right conditions. Working with a broker is a great way to protect yourself and have someone with negotiating experience advocating for you throughout the sale.
We hope our list of questions to ask a broker when selling a business is helpful for you as you start your research. If you have more questions or would like to discuss specifics around your own company’s sale, reach out to our managing owner, Rory Russell! You can use this confidential form to get the process started. Or, you can call him directly by calling him at 800-354-3863.
We look forward to being your trusted advocate through this big moment in your life and career!
Looking for more insight related to finding an alarm business broker you can trust and rely on throughout the sale process? The following resources are a good place to start:
How Do I Find a High Quality Alarm Company Broker? – Wondering how to even go about finding a broker to consider when you’re ready to sell your fire, security or integration business? We share some tips to help you through the process of finding a broker that’s a good fit for you and your business.
8 Questions to Ask Before Hiring a Broker – Whether you’re looking to buy or sell, these additional questions will help you evaluate a broker and better understand their strengths and weaknesses as you consider your options.
Broker vs. Lawyer: Who to Work With When Selling Your Alarm Business – Weighing your options when it comes to representation for your fire or security business sale? Both lawyers and brokers are popular options, but in our industry brokers tend to be the better bet. Find out why.