In short:
Be wary of ‘no sale, no fee’ business sale agents. Although you won’t lose any money, you’re unlikely to receive anything beyond a directory listing.
Choose an agency or broker that deals with businesses in your price range.
Don’t be swayed by high valuations designed to simply secure the instruction of your sale.
As business sale agents ourselves, we’re perhaps a little biased in thinking that you should choose us, but at the same time, we think it’s important that you choose the right agency to suit your needs.
No business is the same, and that goes double for the sale of them. As such, it’s worth taking a moment to consider which business brokerage is best for you depending on your circumstances.
Making the wrong decision here can hamper how much you eventually receive for your business, or worse still, whether you end up selling it at all.
Don’t they all do the same?
They certainly all look for similar outcomes, but exactly how they reach those outcomes can be wildly different from one another.
It can be quite surprising to find business owners that merely opt to use the first business brokerage they come across. Given how much due diligence business owners put into other aspects of their companies, it’s amazing that a task such as selling one of their biggest assets can be trusted with almost anybody.
Decide on what you want to get out of the deal
Sure, “the most money” is on most business owner’s wishlists, but if asked what the single most important factor about a company sale is, directors would give several different answers.
Business sales expert and Managing Director of Forbes Burton, Rick Smith explains that “it might be that a quick sale is in order to release funds for something else, or perhaps you’re keen to preserve the ethos and success of the business by selling to a personally vetted buyer. Once you’ve established what you want to achieve, speak to agents about your wishes. If they’re reluctant to hear you out, or simply want to do the opposite, then you’ll struggle to achieve the desired outcome.”
Look for reviews
This is an essential part of finding the right brokerage.
Smith adds that you should “remember that you’re putting the fate of your business in the hands of whoever you eventually choose. Make sure that the agency you pick are trustworthy and understand what it is that you’re looking to achieve.
“Don’t just take the word of testimonials published on a company’s website though. Businesses will understandably only use positive reviews to showcase on their site. Instead, head to independent review platforms such as TrustPilot or Google to get a true gauge of the type of business you’re dealing with.”
How big is your business?
Most brokerages or business sales agencies specialise in selling a particular size of company. Some won’t look at companies below a certain valuation, while others will rule themselves out of the sale of large businesses as they’re too big.
According to Smith, “it’s worth having a conversation with any third party you’re looking to help sell your business with to ask what size of business they usually work with.
“If your business is too small for an agency, you could find your sale at the bottom of their priorities. Too big, and your broker may not be equipped for such a sale.”
The sale of large conglomerates for nine-figure sums is almost exclusively handled by the big four consultancy firms who have extensive experience of such deals.
Don’t be swayed by high valuations
It’s very easy for owners to happily go along with high valuations for their businesses. Having built up a business over many years, it’s even easy for the owner themselves to inflate the asking price somewhat.
If you’re looking to sell though, it’s important to be objective about your company’s value. Put yourself in the shoes of a buyer and look at other opportunities around the same price that you’re hoping to receive. Are they better or worse buys than your business?
Relatively few business sales actually reach completion, but a sensible and competitive price makes it far more likely for a company to find a buyer. As great as a valuation sounds, remember that some agencies will tempt sellers in with high valuations purely to secure the instruction.
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Ask who will be handling your sale
Some larger companies will secure the instruction of your sale by organising meetings between you and a slick salesperson, only for you to never see that same salesperson again. Instead, your sale is likely to be handled by several different case handlers within the same department.
“Having one person that knows your company and exactly what you’re looking for is invaluable and can save a lot of time in the long run” adds Smith.
Think about fees
Not necessarily looking for the cheapest, but rather a fee structure that works for you.
Some will look for a payment upfront, others won’t. Then there is the question of whether you pay a flat fee on completion or a percentage of the sale price.
There’s no correct answer here. Much will depend on the valuation of your company. If you suspect that there may be a lot of interest in your business, maybe a flat fee would be more prudent just in case there is a bidding war.
There are a handful of firms that offer ‘no sale, no fee’ services for selling businesses. While these may sound particularly tempting, especially given the difficulty that many find in completing a sale, they’re not recommended.
The sourcing of interested parties alone requires hours if not days of work. Add in the marketing and drawing up of sales details, then the actual negotiations and it’s difficult to see why anybody would do all of this with no guarantee of payment at the end of it.
As such, they often don’t. Without an initial fee, it’s unlikely that your broker/agent will be doing anything proactive with your sale. Smith mentions that “in most cases, you can expect a listing in a sales directory and very little else.”
Do you need to go sector specific?
Some businesses can be quite nuanced in what they offer and as a result, can be difficult to communicate what it is they actually do to the layman.
Certain businesses in IT and agriculture, for example, may be unlikely to find a buyer outside of these industries due to how niche they are.
Because of this, they may be better served by partnering with a firm that has roots within the sector, understands the service or product well, and knows which buyers to target.
Thinking about selling your business?
For many looking to sell their business, Forbes Burton has been their first port of call.
We have access to thousands of active investors across a wide range of sectors, and offer free initial consultations to company directors wondering about the best route to take.
Call today on 0800 975 0380 or email advice@forbesburton.com for a free valuation and practical advice on how to sell your company.
