21 Mar How to be the best business broker on the block
Business brokers aren’t miracle workers: your chances of finding buyers and closing deals are always constrained by a business’s appeal and its owner’s attitude.
But even this issue is within your control, as you can be selective in the clients you take on (more on that shortly). And within these constraints, your role as an intermediary can have a meaningful influence during every step of the sales process.
So if you really do want to be the best broker on the block, what does it take to deliver a top-notch service and build a reputation as an intermediary who gets deals done on the best possible terms?
Here’s a checklist to see how you measure up:
Do you offer a specialist service?
Business sellers generally want a broker with extensive experience of their industry to handle the transaction. To this end they are likely to ask some searching questions to establish your credentials.
And if you are appointed, they’ll expect you to take the trouble to really understand their company in order to market its most appealing qualities and match it with the right buyers.
So if you’re hoping for premium returns on your commission, it may be wise to acquire experience in a few industries to meet clients’ expectations. Taking on any business that comes your way may make it look as if you’re in demand, but shrewd sellers will prioritise quality over quantity.
So why be a jack of all trades, master of none?
Can you demonstrate an outstanding track record?
Buyers and sellers will want solid evidence of your worth. But prospective clients – if they’re astute – won’t be impressed by the fact you have lots of businesses for sale on your books.
It’s not unusual for businesses to remain unsold for long periods, sometimes never finding a buyer – which, fairly or unfairly, is seen as a reflection on the broker as well as the company. It’s therefore not worth wasting your time on businesses in bad shape if their owner is unwilling to take corrective action.
What you need is a favourable ratio of number of assignments against completed sales. Be aware also that prospective sellers will expect to talk to some of your previous clients about your brokerage services – and what they hear will probably decisively influence whether they appoint you or not.
Do your marketing materials match your ambitions?
If you’re going to attract the best clients, you’ll need to put a major effort into producing selling materials of a similar caliber.
Your teaser and CIM should – following extensive research into the business – extol the business’s virtues and highlight opportunities for growth in a concise, evidence-based fashion. Your client will expect facts and figures, rather than flowery, vague, even meaningless claims with no evidence to back them up (eg: “this superlative enterprise offers buyers the dream business opportunity with amazing potential!” But how? That’s the question buyers will want answered).
Do you command clients’ trust and respect?
When it comes to valuing the business, inexperienced, incompetent or plain unscrupulous brokers are prone to telling prospective clients what they want to hear – i.e. what it takes to get the assignment.
But all worthy brokers know that a business must be priced at a realistic level. That means managing the expectations of sellers, who often have an inflated view of their business’s value.
Complete honesty in this area will help secure your client’s trust – an invaluable asset when you’re negotiating on their behalf. This approach will boost the likelihood of a successful outcome as well as your reputation.
How strong are your professional connections?
A broker can rarely give the best service by handling every aspect of a transaction alone. There will be times when you need to call upon accountants, lawyers and other professionals.
Your ability to recognize the need for specialist input is a hallmark of a client-centered, diligent professional. And by introducing your seller to reputable lawyers or accountants in your professional network you can create a virtuous circle of referrals.
Do you go the extra mile?
Will you do that little bit extra to make sure your client finds a buyer and persuades them to pay a fair price?
For example, you could coach them on handling the management presentation and the questions they should expect to face. Far from producing contrived, stock responses, this will put them more at ease in a potentially stressful situation and help them present their company in the best light.
Likewise, a top-quality broker will make themselves available at every point in the deal, fulfilling a promise to deal with queries promptly (delays are a common factor in buyer withdrawal).
The best brokers ensure their clients get what they pay for. They calibrate the client’s expectations at the outset, find the right buyer, maximize the sale price and address the misunderstandings and mistrust that often scupper deals.
Of course, success is never guaranteed. But at the very least, the client should conclude your relationship knowing that you always acted in their best interests and went the extra mile – and that kind of news tends to travel fast!
By Melanie Luff, Online Journalist for BusinessesForSale.com, the market-leading directory of business opportunities from Dynamis. Melanie writes for all titles in the Dynamis Stable including PropertySales.com and FranchiseSales.com.