How to Sell Your Business, page 18

Working with Intermediaries, continued

Essentially, anyone can hang out a shingle, or print a business card, and enter this business. In addition, many brokers are effectively part-time (they may also be real estate agents, industry consultants, or welfare recipients).

This means that you should be really careful before committing to work with an intermediary. Caveat emptor applies here in full force! The broker should pass the smell test and demonstrate understanding of your business and access to buyers. (It’s worth spending enough time with a potential broker so that you can be sure of these points.)

Brokers are not generally hired to find strategic buyers—you are the best source of ideas about these buyers. But a broker may help you distill your industry knowledge to pinpoint possible buyers, and also be useful as an intermediary who helps the deal progress. (You may wish to specify a reduce fee to the broker if you bring in the buyer.)

On the other hand, if you are hiring the broker largely to help find a financial buyer, you should be sure that the broker has access to these buyers. Ideally, the broker should have a track record of successful (and referenceable) deals.

Often, the best brokers are specialists in particular industries who have deep contacts in these industries, and may only serve as intermediaries on an opportunistic, part-time basis.

Continued next page

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