The importance of finding a good business broker often transcends other priorities in trying to sell or buy a business. In many instances, the expertise and dependability of the business broker you hire to help you with your M&A requirements will be decisive when it comes to the pursuit of finding a good candidate to buy from or sell to, as well as to the aim of getting more of a profit or a leverage following the transaction.
As a result of all this, interviewing a business broker can be one of the main actions you should consider when you want to sell your business, as well as purchase or merge with another business.
Understanding the Position of Your Business Broker
When you consider business brokers or an M&A advisory company to help you out, you have to keep in mind that they don’t actually have the ability or function to manage the business merger or transaction for you. Instead, their role is more that of a mediator who brings the two parties together, helps to negotiate the best price and terms, and gives advice for smoothing things over, preparing paperwork and ultimately closing a favorable deal.
While all these issues can be managed by an M&A advisor, many can not:
- Firstly, they can’t make your decisions for you, they can only provide advice, support and knowledge to help you make your choices yourself.
- M&A advisors and business brokers are not legal advisors, and they cannot act as a valid substitute for proper legal counsel from an attorney.
- They typically do not handle any kind of underwriting activity.
- There is a very real difference between what M&A advisors and business brokers can help you with, as the latter are more specialized in mediating smaller transactions.
Important Questions You Have to Ask
Keeping all that in mind, there are some important questions that you have to ask whenever you consider the option of hiring a business broker. Many of these have to do with their ability and expertise, but it’s also important to talk about credentials and references.
In fact, the first question you should ask – at least, according to most experts in the field – is, “what are your qualifications and credentials?” You should look for a CBI (Certified Business Intermediary) designation and credentials from the International Business Brokers Association (IBBA) that show the advisor has completed their relevant education and is qualified to help mediate your business merger or purchase.
Next, it’s important to look to see just how interested and motivated the broker is to help you with your transaction. Will they help you negotiate properly? What is their approach to finding, researching and talking to the prospective companies that you should be doing business with?
Finally, make sure you inquire about the details of their process. Not all business brokers handle matters in the same ways, and some might be less conventional than others. Do some research on how the negotiations and advisory work is normally conducted by most business brokers, and then make your own decision on whether or not the process that your broker provides is up to par with your specific requirements.