11/ 21/ 2005
Ask about fees. A legitimate broker gets no money up front. Fees are paid only when escrow closes.
Inquire about experience. “A good business broker should be far more knowledgeable than the potential buyer or seller,” says William Reinis, who suggests asking for references and inquiring about the broker’s background. “How many sales has the broker had? Has he owned businesses, and does the broker understand your industry?”
Ask for references. Talk to buyers and sellers who have worked with the broker about their experiences.
Evaluate carefully. One key sign is whether the broker asks all of the right questions. “A knowledgeable broker should ask pointed questions, such as why you’re selling and how much the success of your business depends on you and your skills,” Reinis says. “The business broker must understand your company and have your best interests at heart.”
“Like a real estate agent in the sale of property, a business broker initiates the sale of a business and oversees negotiations so that everyone involved is treated equitably,” says William Reinis, who owns American Business Advisors in Orange, Calif. “A good business broker will also give you a realistic idea of what your business is worth.”
Though a business broker generally earns 10 percent from the sale of your business, he handles the entire sale for you. If you choose to keep the potential sale quiet, he also ensures that negotiations remain confidential.
The International Business Brokers Association has a database of more than 1,500 potential brokers. The IBBA offers educational materials and a certification to members. To find IBBA brokers in your area, visit the IBBA Web site.
