Qualities of a Great Broker


How can you tell a good business broking agency from a bad one? The appropriate question should be: can you really tell a good business broking agency from a bad one? Well, you certainly can, but it’s not really that easy. However, there are certainly qualities that separate the good business broking agency from the bad one, and these qualities are quite visible to those who pay attention. Some of these are:

Strict Adherence to Ethics

The most basic difference between a good business broking agency and a bad one is that the former strictly adheres to ethics, while the latter often demonstrates a lack of ethics. Like all other professionals, there are black sheep among business brokers, and the lack of ethics in some business brokers is a reality, though an unfortunate one. Another unfortunate thing is that there is really no easy way of testing the ethics of  a business broking agency. The best way is to make sure that you choose business brokers who are members of some industry body, for instance, the AIBB, etc. That’s because business brokers who are members of an industry body agree to strictly adhere to the body’s Standards of Professional Conduct as well as its Code of Ethics.

Some may argue that mere acceptance of a code doesn't necessarily guarantee anything. True, but at least it’s a starting point, and a good one at that. Another thing you can do is to ask for client testimonials and check references. But client testimonials and references may not really present the true picture as you can count on being presented with testimonials from and references to the most satisfied of their clients – clients who will only have good things to say about the agency.

The third way is to check with your accountant and attorney or other accountants and attorneys you may know. That’s because small business sales transactions necessarily involve attorneys and accountants and these professionals are an excellent source of referrals to ethical business broking agencies. The attorneys and accountants you know may not be involved in small business sales transactions as such professionals tend to specialize these days, but they may know or may be able to find accountants or attorneys who are involved in such transactions and can therefore refer a reputed and ethical business broking agency.

Openness and Honesty

A good business broking agency has a general air of openness and honesty, while a bad one naturally lacks such air. You may not always be able to detect this air, but in most cases you can count on your gut to give you some sort of indication after you meet with or talk to someone at the agency. There are certain warning signs that stimulate your gut feeling and also determine its direction. For instance, was the person you met with or talked to dodging your questions altogether or giving vague replies? Was he or she willing to sit down with you and answer every single one of your questions to the best of his or her ability? If not, why not? Was it because the agency had something to hide? A genuine and honest business broking agency doesn’t have anything to hide and so when you visit or call, they will be willing to sit down with you and answer all your questions in the most direct manner and in as much detail as you require.

Ability to Correctly Value a Business

Strict adherence to ethics and openness and honesty are important, but what use is an ethical and honest business broking agency if they are not competent enough to provide the services you require – the most important being the correct valuation of your business. It is extremely important for your business to be priced correctly. If your business is overpriced, you will not be able to sell it. On the other, if it is underpriced, it will sell quickly, but you will not be able to make a decent profit on the sale.

Have a discussion with a prospective business broking agency about valuation and ask them how they would value your business if you decided to work with them. Do some light reading on the three different types of approaches, so as to be able to gauge their competence in this area. Additionally, ask for samples of their pricing analyses. They should be able to provide generic samples. Take the samples with you and go through them. See if their analysis would impress you enough to consider buying it if you were in the market for such a business. Your accounting or financial planning background should make it very easy for you to review the samples.

Ability to Develop and Implement an Effective Marketing Strategy

A good business broking agency is able to develop and implement an effective marketing strategy aimed at selling your business quickly and profitably. Ask brokers at the prospective agency about the kind of marketing strategy they have in mind for your business. If the best they can come up with is listing it online, they apparently lack the ability to effectively market your business, that’s because you can list your business online on your own. So why bother paying them? A detailed discussion with brokers at the prospective agency on this matter should be enough to help you determine if they possess the ability to effectively market your business or not.

Requisite Education and Experience 

Brokers at a good business broking agency not only have the requisite education and experience, but continually invest in their education and professional development. Like any other professional, a good business broker has to keep up with current industry trends, government regulations, new pricing methodologies, marketing strategies, etc.

People Skills

People skills is not only one of the most important qualities that separate brokers at a good business agency from those at a bad one, but also one of the most visible ones. The briefest of meetings with the prospective broker is enough to tell you if he or she possess this quality. And what if the broker isn’t willing to meet you in person? Well, if the broker isn’t willing to take that much time and make that much effort, can you expect such a broker to put adequate effort into selling your business? Surely, not. If the broker isn’t able to impress you, chances are he or she has as little effect on buyers. And you can’t really expect such a broker to easily sell your business, can you?

Although what we have mentioned above are mere suggestions – and not fool proof ones at that – but they can still help you in telling a good business broking agency from a bad one, which is really important as the sale of your business is not a matter that you should take lightly.