You have worked hard, and you want to put the really hard work behind you. Retirement is dangling before you and so you’re on the hunt for a broker to help you sell your business. You don’t want any of your hard work to go to waste and you want to get the most from your business.

This means finding the right people to help you meet your goals. And most likely, you already have more questions than answers about selling your business:

  • What do buyers look for?
  • What is my business worth?
  • Is this the best time to sell?
  • Will a buyer pay me what my business is worth?
  • How much should I expect to pay in taxes?
  • Will I have to work for the buyer?

All of these are important questions, and the answers to some may influence your decision on how to handle your business. Some of these questions may reveal that selling your business may not be the most profitable way for you to retire. But if you have weight your options and decided to sell, your next step is to find yourself a broker.

How do you know you’ve found a good broker? What questions should you ask when selling your business through a broker? Let’s first understand whom brokers typically work with.

Business Brokers’ Sweet Spot

If your business generates less than $12M in revenue, the transaction intermediary best suited to help you find a buyer for your business is a business broker. Investment bankers in the DC metro area tend not to work with companies with revenues under that threshold. There are, of course, exceptions, so take these dollar amounts as rough guidelines.

Business brokers work with owners of lifestyle businesses (those that have simply, but consistently, provided lifetime income to their owners) and of businesses in the “lower-middle market” (companies with revenues exceeding $1M and cash flow exceeding $450,000). Again, please note that these dollar amounts are broad generalizations.

Look Before You Leap

What questions will help you to identify the best broker for your business? We’ve listed our favorites below. Of course, before you start interviewing brokers, ask the advisors you trust (your accountant, attorney, commercial banker, financial and exit planner) for recommendations.

There are a lot of brokers out there and it isn’t easy to distinguish the great from the good from the not-so-good. While your advisors will not have worked with every broker active in your area, they most likely have experience (both good and bad) with some of them. If your advisors can’t provide you recommendations, give us a call. We can.

With those recommendations in hand, check out each broker’s website. Some brokers provide the basics about how they operate, but few include much (if any) information about the fees they charge. Many provide lists of deals they’ve completed. Some even include purchase prices. The larger brokerage companies maintain searchable databases of business for sale. The caveat here is that not all listings may be active.

Almost all brokers in Baltimore offer free consultations, so we’ve created this list of questions to help you take full advantage of that consultation.

13 Questions To Ask A Broker BEFORE Selling Your Business: Finding the Best Fit


1. How long have you been a broker?

Brokers come with broad range of experience: some have spent their lives as brokers, some are former business owners who now work with owners and some may be looking to you for their first deal.

2. Tell me about experiences you have had selling companies like mine.

You want to hear about transactions involving businesses not necessarily of similar size or industry as yours but in complexity. If you own a manufacturing company and the broker specializes in small retail firms, he or she may not have experience in dealing with inventory and other issues that are an integral part of your business. You might ask what their top value limit is on the transactions they manage. If they tell you that the sky is the limit, keep looking.

3. How many transactions have you completed in the past year?

This is a logical question, but it doesn’t really get to the importance of experience selling businesses like yours. Again, look for experience—either as an owner or broker of businesses as complex as yours. Ask about their degrees or experience in accounting and finance.

4. How do you charge?

Most brokers charge a commission (or percentage of the purchase price) only, but some add a retainer to the mix. If a broker is willing to lower his or her commission, you should probably expect fewer services. Commission structures can, however, adapt to increases in purchase price. Using a commission to motivate a broker to go for a higher purchase price can work to your advantage.

5. If real estate is part of your sale, ask specifically about the commission the broker charges for selling it.

Many brokers charge the same commission on the sale of the business as they do on the sale of real estate. Given that the normal commission on a real estate sale is around 6 percent, if a broker charges the same rate on both, you could be paying way too much.

6. Will you provide me names of now-former owners whose businesses you have sold?

You may run into claims of confidentiality here. If, however, a broker lists completed transactions on its website, the claim does not hold up. Search consumer websites (such as or do Google search for “reviews of Broker X” or “complaints about Broker Y.” If the broker does provide references, check them!

7. Will you provide me names of any accountants, lawyers and/or financial planners you have worked with in the past?

If a broker cannot provide names of past clients citing confidentiality concerns, insist of names of advisors. If a broker cannot provide any, consider this a red flag. If he or she does give you names, call those advisors.

8. Of the transactions you completed in the past year, what percentage were franchises and what percentage non-franchise?

The broker’s answer helps you gauge his/her expertise in one or the other.

9. What process do you use to set a sale price?

Listen for phrases like “rules of thumb,” or “multiples of earnings,” or “EBITDA” or “SDE.” Does the broker use industry statistics/comparables, multiple valuation methods or a hybrid? If you aren’t familiar with these terms and want to know how each relates to your business and affects its sale price, talk to your accountant or financial planner before talking with a business broker.

10. What triggers you to reduce an asking price?

Listen carefully to learn whether you have any control of asking price reductions.

11. What are the terms of your listing agreement?

A one-year listing term is fairly standard. Ask about the conditions under which you can cancel the agreement. Ask specific questions about the agreement’s “tail:” How long does it last? To whom does it apply? Will you be provided a list of all parties the broker contacted and are therefore covered by the tail? If a broker tells you that s/he will not provide a list of contacted parties, it’s probably best to conclude your interview.

12. Describe to me the actions you take to prepare my company for sale.

Note: Listen here for whether the broker will accept your financial records as is or will use them to create a clear picture of cash flow under a new owner. Will he or she “recast” or “normalize” them to add back those perks and expenses that you have taken over and above the salary someone replacing you would normally earn? What process do they use to collect the documents that buyers will require for due diligence? Will the broker be with you through every step (e.g. deal structuring, negotiations with buyers and contracts, etc.) or simply show up at closing?

13. What measures do you take to protect my confidentiality?

Note: Expect to hear that the broker will require interested buyers to sign non-disclosure agreements (NDA) before receiving any information about your company. Ask for a copy of that agreement so you can review it. Ask when you’ll meet with prospective buyers: after a signed letter of intent or a signed asset purchase agreement?


Counsel with Trusted Advisors When Selling Your Business & Ask Your Broker Questions

Choosing a broker to represent you in the sale of your business (really, the conversion of your biggest asset into cash) is a big deal. (Pardon the pun.) We strongly suggest that you first seek broker recommendations from advisors you trust and then use these questions to find the one that will help you execute what is likely to be the biggest financial transaction of your life. When selling your business, asking questions (especially with potential brokers) is the key to getting the most out of your business in Baltimore.



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