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“I went through several
brokers before I found
one who was competent
enough to properly
prepare, price, market
and sell my business.
I wish I had this guide
when I started my pro-
cess. I would have sold
much, much sooner.”
Platinum Dry Cleaners
• Sales Record
• Valuation and Pricing
• Marketing Process
The IBBA reports a competent broker can add as much as 20% to your selling price.
You have one opportunity to
sell your business
You will want to hire the most qualified individual possible to assist you. This
guide asks nine very important questions all business owners should ask when
hiring a business broker. The profession is known for its lack of competence
as it is often attracts unqualified individuals who may mean well, but lack the
necessary temperament and skills to complete a successful transaction.
Make the right choice
• Take your time. Do not be afraid to start the process a year or more before
you plan to put your business up for sale.
• Interview multiple brokers. A second, third or even fourth opinion never hurts.
• Competency and focus is critical. You would not hire a podiatrist to perform
heart surgery; therefore, why would you hire a commercial or residential
realtor to sell your business?
It will benefit you
• BizBuySell reports only about 20% of businesses listed on their website sell.
• The International Business Brokers Association (IBBA) reports a competent
broker can add as much as 20% to your selling price.
for Selecting a
1. What are your qualifications,
experience and certifications?
It is critical your broker is an expert at analyzing and recasting financial
statements; valuing and pricing businesses; and marketing and advertising.
Experience and creativity matter
It is important your broker has been selling businesses for at least several years.
Selling a business is incredibly difficult. You need a broker who has the
experience and creative skills needed to keep your deal together. Former
business owners make the best brokers. A broker who has operated, bought
and/or sold their own business is better prepared to understand your emotional
needs and financial goals while guiding you through the process.
Certified Business Intermediary
If your business is below $1M in EBITDA, make sure your broker is an active
Certified Business Intermediary (CBI) registered with the International Business
Brokers Association (IBBA.org). A broker who has obtained the CBI designation
has met the stringent education requirements and high ethical standards of the
IBBA for main street business sales. It is important your broker is an active CBI.
To maintain active status, the IBBA requires continual membership and
Certified Merger & Acquisition
Master Intermediary or Professional
If your business is above $1M in EBITDA, make sure your broker/intermediary is
a Certified Mergers & Acquisitions Master Intermediary or Professional (M&AMI
or CM&AP). The M&AMI and CM&AP requires achieving in-depth knowledge of
the specialized approach required to successfully prepare and execute lower-
Hire someone who has invested time and dollars into their craft.
Creativity keeps deals together.
Hire a CBI,
A certified broker/intermediary
has the necessary training to
• Analyzing and Recasting
• Valuing and Pricing
• Marketing and Advertising
• Ethical and Legal Aspects
of Business Transactions
• M&AMI and CM&AP’s
Understand the Specialized
Approach Required for
If your broker/intermediary is
not certified, it is a clear
indication they have not made
the investment in time and
dollars to ensure proper care
in preparing and selling your
• Business Brokers of
• California Association
of Business Brokers
• Texas Association of
• Midwest Business
Brokers & Intermediaries
• New England Business
• Pennsylvania Business
• Mid-Atlantic Business
• Arizona Business
• Michigan Business
• Colorado Association of
Associations provide education, marketing and networking benefits.
2. What business broker
associations do you belong to?
Associations such as the International Business Brokers Association (IBBA) and
state/regional associations such as the Business Brokers of Florida (BBF) provide
not only excellent marketing and networking benefits, they also provide training to
stay on top of the latest processes, methods and tools for selling businesses.
Members of associations are better trained and equipped to sell businesses.
International Business Brokers Association
As of June 2017, the IBBA has over 900 members. Roughly half of the members
have earned the prestigious CBI designation. For more information on the IBBA,
visit their website at www.ibba.org.
State and regional associations
Florida is the most organized state when it comes to business brokerage. Their
association has over 1,200 members and promotes co-broking. California and
Texas are also very well organized. Other state and regional associations are
listed in the left-hand margin.
3. Are you willing to co-broke?
Co-broking is helpful as it maximizes your business’s exposure to buyers. With
the exception of BBF members in Florida, very few associations require co-broking
with other business brokers. Financial planners, CPAs and business attorneys are
often great resources for finding buyers and sellers. Where allowed by law, referral
fees can entice other professionals to refer buyers and sellers to your broker. Your
broker’s focus should be on selling your business to the first qualified buyer and not
on earning 100% of the commission. Ask your broker how they plan to cooperate
with other brokers.
Cooperation gets deals done.
You deserve an expert at transacting businesses and available when you need them.
4. Do you sell businesses full-time?
Your broker should be 100% dedicated to business transactions. If your broker’s
time is split between selling houses, commercial properties or other side-jobs, they
will have less time to commit to learning the nuances required to sell a business
and to you. You deserve a broker who is an expert at selling businesses and
available when you or a prospective buyer needs them to keep your deal together.
5. What is your sales record?
Ask your broker for the number of deals and average transaction size they
completed in the past year and lifetime. How many deals are near your transaction
size? This will give you an indication of how many buyers your broker has
financially qualified to complete your transaction. If your broker has only completed
very large transactions and your business is worth $500K, chances are they are
not talking to buyers who will buy your business, and visa-versa.
6. What are your fees?
Expect to pay a success fee of 10% at time of sale for a business transacting
under $1M, $10,000 for a business transacting under $100K and Double Lehman
for transactions over $1M. Some brokers want to charge 12% or 15%. If you have
a good, solid and profitable business, demand 10%. If your business is struggling
or the broker believes you may be difficult to work with, 12% or 15% may be fair.
Some brokers will charge an up-front fee to list your business for sale, perform
specific marketing programs or complete a valuation. Ensure any up-front fee is
discounted against the commissions upon the sale of your business. A broker
asking for significant sums of money up-front, e.g., $5,000 or more to list your
business, will likely to be less motivated to sell your business than a broker who
earns their fee upon successful sale of your business.
Know what you are paying for.
Many business brokers are
realtors due to State licensing
laws. Do not confuse the two.
Selling homes and commer-
cial properties is very different
from selling a business.
Many residential and
commercial realtors trying to
sell businesses often do not
understand or respect
confidentiality nor do they
understand the financial
recasting, valuation and
pricing processes at a depth
necessary to successfully sell
your business and maximize
• Number of Deals
• Average Transaction Size
in the past year and lifetime.
• Direct Market Data
• Guideline Public
• Mergers & Acquisitions
• Capitalization of
• Discounted Future
• Multiple of Discretionary
Earnings (DE) Method
• Net Asset Accumulation
• Excess Earnings
• Pratt’s Stats
• BBF MLS
• Proprietary Tools
• Buyer Perceived
• Fair Compensation
• Debt Coverage
• Return on Investment
• Supply and Demand
• Willingness to Offer
• Strategic or Synergistic
The percentage of brokers who do not value and price properly is shocking.
7. How do you value and price a
Having a thorough understanding of analyzing and recasting financial statements
is critical when valuing and pricing a business. Trust can be broken and deals can
fall apart if the initial recast by the broker is inaccurate.
In general, there are three approaches to valuing a business, i.e., Market, Income
and Asset Value. Together these approaches have eight methods for valuing a
business. Your broker should know the appropriate valuation methods to select
when valuing your business, e.g., Direct Market Data, Multiple of Discretionary
Earnings, M&A and Excess Earnings Methods.
Access to valuation tools is imperative
Competent brokers have access to many valuation tools; specifically, sold
databases and valuation software. Sold databases include the Pratt’s Stats,
BizComps, PeerComps and BBF MLS. Valuation software includes BizComps,
PeerComps and proprietary tools. Adjustments are made to the valuation
based on industry, assets, inventory and buyer perceived defects/risk factors.
Your broker should also take into consideration a buyer’s fair compensation,
debt coverage and return on investment when valuing your business.
Pricing is dependent upon supply and demand of your business type, your
willingness to offer seller financing and in rare cases interest from strategic or
synergistic buyers. If your broker lets you set the price, or simply uses “rules-of-
thumb,” they are not doing their job and the chance of selling your business is
If your broker lets you set the price or uses “rules-of-thumb,” they are not doing their job.
8. What is your marketing process?
Anyone can post a listing on BizBuySell and BizQuest and wait for emails and
phone calls. Does your broker re-enter listings periodically to move them back
to the top? What other listing websites do they utilize? Do they have an active
buyer email list and how many qualified buyers are on it? How often are they
in contact with these buyers? How active are they on social media, especially
LinkedIn? Will they do targeted marketing campaigns based on an agreement
Confidential Business Review
Ask your broker for a recent Confidential Business Review (CBR). The CBR
should answer the basic questions a buyer will ask to determine if the business
is a good fit or not. Sadly, many brokers are lazy and only provide marked up
P&Ls or tax returns. Laziness wastes a ton of time for buyers and sellers. Most
buyers will simply skip over a business not properly prepared for sale. Others
will demand a meeting with the seller only to ask very basic questions that if
answered in a CBR, would have led the buyer to realize the business is not a fit.
In some instances, it is helpful for the CBR to include industry market, trend and
benchmarking information to better understand your companies position in your
industry. This information can be obtained from databases such as BizMiner
and IbisWorld. Ask your broker what industry databases they use to help position
If your business generates more than $2M in EBITDA, BizBuySell and BizQuest
are not the best marketing tools for finding buyers. In fact, placing it in public
listing forums and/or putting a price on the business is a sure sign of your broker's
incompetence in handling a business your size. These businesses need to be
placed in lower-middle-market deal rooms such as Axial, DealNexus or BankerBay
where private equity groups and large private or public investors search for
acquisitions. Sophisticated investors will have their own process for valuing a
company; therefore, establishing a price sets an upper limit on what a buyer may
be willing to pay.
Sadly, many brokers are lazy and only provide marked up P&Ls or tax returns.
• Appropriate Websites
• Re-Enter Listings
• Buyer Email List
• Social Media Ads
• Targeted Marketing
• Business Description
• Price and Terms
• Financial Recast
• Asset List
• Competitive Overview
• Customer Overview
• Employee Overview
• Facilities and/or Lease
• Hours of Operation
• Industry Trends
• Licenses Required
• Products and Services
• Required Skills
• Reason For Selling
• Restrictive Covenant
• Transition Assistance
• Year Established
• Corporate and Private
• Unique Deal Sourcing
• Quality of Earnings
9. How do you ensure confiden-
tiality and qualify buyers?
Keeping the sale of your business confidential is very important. It can be
detrimental if customers, employees, competitors or suppliers become aware
you are selling. Ask what policies are in place to keep the details of your sale
confidential. Every prospect should be required to sign a non-disclosure
Personal financial statements and skill set
If your business is priced over $100K, make sure your broker demands a financial
statement from each prospect and takes the time to learn a little bit about their
qualifications to operate your business. The last thing you want is to waste your
time with a prospect who does not financially qualify to purchase, or have the right
skill set to operate, your business.
Maintaining confidentiality is crucial in the sell of a business.
• Personal Financial
• Skill Set Qualifications
• Seller Approval to
• Offers Presented within
24-Hours of Receipt
• Due Diligence Management
• Assist with Lease and
• Recommend Lenders,
Closing Attorneys, etc.
Every prospect should be required to sign a non-disclosure agreement (NDA).
• Sales Record
• Valuation and Pricing
• Marketing Process
8891 Brighton Lane,
Bonita Springs, FL 34135
By investing time and money in
education, certifications and best
practices, Eric has achieved
tremendous return for Edison
Avenue clients who have
businesses at a much higher
rate than the industry average.
Eric J. Gall is the registered Broker and a Managing Partner at Edison
Avenue. Over the past 20 years, he has participated in many forms of
business transactions totaling over $140M. He won the 2016 & 2014
Business Brokers of Florida (BBF) #1 Top Dollar Producer Award for
Southwest Florida beating out 70 other BBF brokers. His 2016 transaction
volume ranked seventh in the State of Florida out of 1,115 BBF brokers.
He is the only broker in the Top 10 not located in the larger Tampa,
Orlando or Miami/Fort Lauderdale markets.
Eric is highly credentialed having obtained his Certified Business
Intermediary (CBI) from the International Business Brokers Association
(IBBA) and his Certified Mergers & Acquisitions Professional (CM&AP)
from Kennesaw State University. He is one of two active CBIs and the
only CM&AP in Southwest Florida. The CBI requires meeting stringent
education and performance requirements as well as the high ethical
standards of the IBBA. The CM&AP requires achieving in-depth
knowledge of the specialized approach required to successfully prepare
and execute lower-middle-market transactions (above $1M in EBITDA).
Eric holds BSE and MBA degrees from the University of Michigan.
Prior to co-founding Edison Avenue, Eric bought, sold and operated
several businesses in the automotive, IT and transportation sectors and
worked in Corporate M&A at Ford Motor Company. He is a member of
IBBA, BBF and is the ABBA's National Best Practices Forum Leader.
Trust a firm with proven credentials and results.