by Heather T. | Jan 8, 2025 | Business, Observations, Operations, Selling a Business
Additional information on each question from 50 Questions to Ask a Business Broker When Selling a Business
Q1. Are You a Real Estate Agent?
Why should you ask this?
If you own the property where your business operates, it’s important to choose a broker who holds a real estate license. If you are selling the property or offering a long-term lease to the buyer, your broker must hold a real estate license to properly assist with these negotiations. If not, they’ll need to work with a third-party real estate agent, or they risk violating the law.
If a third-party agent is involved, make sure that they are also experienced in handling commercial real estate transactions for owner-occupied buildings. A broker with real estate knowledge can guide you on market conditions, lease terms (if leasing), and pricing, which are important in a business sale.
Avoid using a real estate agent who only occasionally handles business sales. Business brokerage and real estate sales require different skill sets.
A real estate agent who dabbles in business sales might attempt to sell your business and list the real estate separately, which could compromise confidentiality. It’s best practices to work with a broker who specializes in both the business AND the property to ensure a seamless and confidential process.
If you would like to check the current licensing status of a broker with a real estate license you can visit the Arello Database at https://www.arello.com/search/ (free).
by Heather T. | Jan 7, 2025 | Business, Observations, Operations, Selling a Business
This is not legal advice, this is based on information gleaned from experience and pages and pages of notes from working with clients over the last 20 years who have gone through the process of selling their business, and the lessons learned from clients and assisting them in working with good business brokers and sadly, some not so good ones. Plus I promised I would do a follow up post to the blog post on Exit Strategies for Bed and Breakfasts.
Whether you choose to vet a business broker using all 50 questions or only a few, is entirely up to you. I’ve only come across articles that suggest a couple of dozen questions to ask, but the following are all ones that clients I have worked with over the years did (or should have) asked before dealing with a broker.
When I started writing this article, I was going to do a quick overview/explanation for each question, but in reviewing notes added more questions (you really should ask as many as possible) and also started going more into depth on WHY you should ask each question.
Around page 35, I considered maybe I should find some alternative ways to put down this information, rather than requiring readers to sift through 35 pages of text to find answers to any of the 50 following questions. So in an effort to streamline this a bit, I’ll post one follow up explanation/more detail to each question per day on the blog and link back to each question. I hope it’s useful. If anyone needs all the specific questions answered prior, please reach out and I’m happy to share in advance. (no sales pitches included 🙂 )
Questions to Ask a Business Broker When Selling a Business
- Are You a Real Estate Agent?
- How long have you been a business broker?
- Are you a member of any professional business brokerage organizations?
- Do you have any credentials or certifications as a business broker?
- How many businesses have you sold in my industry?
- What’s the average size (in revenue or transaction value) of businesses you’ve sold?
- For your last sale, what was the original asking price? What was the sales price?
- What is the typical time frame for closing deals that you’ve managed?
- How long did it take you to close your last three sales?
- Can you provide references from past clients, especially in my industry?
- Do you have any case studies or success stories I can review?
- Do you have a team supporting you, or are you handling everything on your own?
- How will you determine the value of my business?
- What factors do you consider when valuing my business?
- Can you walk me through how you determine the valuation?
- How will you market my business to potential buyers?
- What types of buyers do you typically attract (strategic, financial, individual)?
- What online platforms do you use to promote listings?
- Do you have an existing network of potential buyers or sellers? Do you maintain a database of qualified buyers, or will you be reaching out to new prospects?
- What services do you provide during the due diligence process?
- How do you ensure the confidentiality of sensitive business information?
- What steps do you take to protect the identities of buyers and sellers?
- How do you maintain confidentiality during the marketing and sale process?
- What is the typical timeline for selling a business like mine?
- What are the key milestones in the sales process, and how do you handle each stage?
- How do you handle negotiations with buyers?
- What are your commission rates and fee structure?
- Are there any upfront fees?
- Do you charge a minimum fee if the sale price is lower than expected?
- How is the commission calculated (e.g., a percentage of the sale price)?
- How do you screen and qualify potential buyers?
- Will you handle initial inquiries and vet buyers before involving me?
- What information will you require from prospective buyers to ensure they are serious?
- What role do you play in managing the legal aspects of the transaction?
- Do you have relationships with attorneys, accountants, or tax advisors?
- Will you assist with drafting the Letter of Intent (LOI) and the Purchase Agreement?
- How often will you keep me informed about the sale’s progress?
- What type of reports or feedback can I expect during the process?
- Who will be my point of contact, and how accessible are you for questions?
- Do you require an exclusive listing agreement? If so,for how long?
- What happens if I find a buyer on my own during the listing period?
- What are the terms for terminating our agreement if I am not satisfied with your services?
- What role do you play in ensuring a smooth transition after the sale?
- Will you assist with any post-sale responsibilities, such as training the new owner?
- Do you provide post-sale support for the buyer?
- What are the common reasons deals fall through, and how do you mitigate those risks?
- What challenges do you foresee in selling my business, and how will you address them?
- How will you align the sale with my overall financial and personal goals?
- Can you advise on the tax implications of the sale, or recommend experts to do so?
- What are some of the documents you need from me to get started?
