20 Dec Top Reasons You May Want to Sell Your Brokerage Firm
Like any other business owner, there will come a time when you make the decision to sell your business.
Whatever your reasons for choosing to put your brokerage on the market, you will still be looking to maximize the return you get on all those years of hard work.
So, let’s take a look at some possible scenarios which may prompt you to move on, as well as the steps you need to take to make it happen.
Many brokers get into market very young and then stay there through the years. Naturally, a time arrives when you want to take your foot off the gas, sell up and enjoy the fruits of your labor.
But before heading towards the exit, you’ll need to take a good look at what’s on offer to your successor. Is this a brokerage firm which depends almost exclusively on your skills, knowledge and expertise gleaned from decades of trading? Or is a lot of that know-how distributed throughout your team?
No one will pay much for a brokerage if all the value and client goodwill is tied up in the owner who’s about to retire. You must find ways to demonstrate clearly that you have a knowledgeable manager and team in place who can handle the day-to-day business profitably when you’re not around.
With a brokerage especially, that means working to ensure major clients are happy to deal with nominated team members who handle their account.
Otherwise you risk the scenario of established clients moving their business the moment they hear the news that you’re heading for a place in the sun.
Perhaps you’ve got ideas to move into some new enterprise – a clean break from all your present responsibilities.
After all, the business acumen you have acquired as a broker could easily be applied to other businesses. And you may be looking forward to putting into practice all you’ve learned from other people’s mistakes over the years.
So, moving into a new career can be a progression rather than crisis. But just take care to keep a strong focus on your brokerage while you handle the transition.
As an experienced intermediary you’ll understand that maintaining client confidence is key to any successful business. And on the other side of the counter, your team also take their cue from you in terms of enthusiasm and motivation. This means your business could start to falter unless you remain fully engaged, no matter what is taking shape in the rest of your world.
And what goes for your staff will also apply to the way you handle approaches from prospective buyers.
Don’t forget the burning ambition you once had and the zest with which you began the task of building up your brokerage firm.
Provided you don’t give out false hopes and suspect business information, your buyer expects you to be upbeat about the industry – and will take it as a warning sign that they might be making a mistake if you’re not.
A struggling firm
You may want out of the business because declining performance is compromising your profitability.
In this instance, it might be time to consider selling. In the meantime, it can be an opportunity to remind both new and established clients that steep peaks followed by valleys are just the market’s way of giving investors a reality check.
In fact, if things are tough and unpredictable, they are likely to need savvy professional advice even more. As a broker, your own business will also have to do the same. But even in these conditions there will always be buyers who believe that new energy and a fresh pair of eyes will make all the difference.
So, don’t feel that under-performance alone will prevent a sale – professional valuers will always look at underlying trends.
Valuation: What’s it worth?
A professional valuation which is independent and prepared in line with best practice in your sector should form the bedrock of your sales strategy. Whatever your own experience, you can’t offer an unbiased opinion about your own company.
And when it comes to any sale negotiation, your buyer’s due diligence team will have you on the back foot from the outset.
Remember also that a valuer can give you rich insights into just where the value really lies in your business. Once you have that knowledge, you’ll know what to focus on in the time leading up to any sale – and perhaps add some genuine value which will positively influence the figure you settle for when the deal is done.
Armed with professional advice, you will have a much better chance of approaching the market on your terms. That will be good for you, and good for your business too as it moves on into the future under new ownership.
By Bruce Hakutizwi, USA and International Accounts Manager for BusinessesForSale.com, the world’s largest online marketplace for buying and selling small and medium size businesses. Bruce has over 7 years’ experience working within the US business transfer marketplace connecting buyers and sellers.