Characteristics of a Good Business Broker

If you are thinking about selling a business, or perhaps investing in one, then you may have considered using the services of a business broker. Although using the services of a business brokerage are advisable, it is important to note that not all business brokers are the same. Please note that in the province of Ontario the correct terminology is simply either "broker" or "sales representative", depending on the registration of the professional. Nomenclature and terminology across Canada may differ for the profession, but for the purposes of this article we will use the term "business broker".

This article is a brief summary of some characteristics to consider before you work with a business broker.

Experience selling businesses

One of the top qualities you should consider when dealing with a business broker is their level of experience in selling businesses. How familiar are they with the process and is business brokerage an area that they specialize in? Many times a business owner will contact a ‘real estate' professional, thinking that selling businesses and selling real estate are one and the same. They most certainly are not. The two transactions are very different in many important ways so it is advisable to deal with a business broker when you want to sell a business.

Personal chemistry

This is an important element but one that is difficult to quantify. It is quite important that the business broker you deal with have a good rapport with you. It may take several months for your business to sell so you want to be confident that you have a strong working relationship with the person that will be representing your company to investors.

Business background

To successfully mediate a business sale transaction a competent business broker should have a good background with financial statement analysis, marketing, sales and finance. A good candidate for business brokerage is usually someone with an entrepreneurial background and/or a formal business education - an MBA, CA, CFA or similar is advisable.

A business broker who listens

Selling a business requires the skills of a good listener. Oftentimes, the most germane aspects of a negotiation can be lost is a person fails to listen to what the other party is saying. A business broker should be a very good listener and be able to extract a person's true meaning from a conversation. This level of communication is called "intuition" and is a highly valued skill in business brokerage.

Proactive Approach

The process of selling a business requires a proactive approach in order to find buyers. A competent business intermediary should have a ‘system' that puts him or herself in front of a large pool of buyers on a constant basis. Since the vast majority of business sales are confidential it is critical that the business broker you deal with not merely rely on a few ‘leads' from buyers but instead have a cohesive system to put your business in front of dozens or hundreds of potential buyers in order to find the one that will actually buy.