The business model for a quality business broker is to get paid for results; we get paid when you sell your company. But some brokers charge sellers significant up-front costs or require a monthly retainer for listing the business for sale. Here’s why you shouldn’t consider doing business that way.
First, you’re paying for the process rather than the results. Most brokers who charge a large fee upfront are charging for an in-depth valuation and market analysis. They often present the valuation and analysis in a beautiful, glossy book with lots of PowerPoint slides. It looks great, but it’s the same analysis any broker will do for you as part of the marketing process. So the question becomes, why pay for this out of pocket when your broker will do the same thing as part of their promise of a commission?
When a broker charges for the valuation and market analysis, that becomes their business (and a lucrative one.) If they can make $30,000 or so on each valuation, whether they sell the business or not, actually getting the business sold becomes less urgent. It’s even less urgent if they’re earning a retainer fee each month.
Another variation of the pay-up-front model is the self-help course on how to sell a business. The information might be useful, but it’s the same information any broker will provide when you engage them to put your company on the market.
Getting paid only when the business gets sold is a compelling motivator. It puts the broker and the seller on the same team with the same goal: closing the best deal possible with a qualified buyer as quickly as possible. The broker is investing their time and resources, paying for marketing, research, and analysis on their own until the company sells and they can be reimbursed for their efforts
The primary job of a broker is to market your company in a way that creates competition among buyers. That means finding more than one potential buyer and helping each prospect understand the value of the business. We keep the two sides communicating, work through issues, and make sure the deal doesn’t break down along the way. We’re rewarded for getting the best price for your company because we charge a percentage of the sale; we win when you win.
The services brokers provide before and during the sale are valuable, but the true value we provide is in closing the deal. Getting paid only when and if the deal closes provides a powerful incentive, one that’s aligned with the seller’s interests.
As a business owner, you probably hate paying for unnecessary bells and whistles. Don’t change that principle when you’re getting ready to sell your business.
Bianca Evans is an experienced business broker based in Jacksonville, Florida. She is a top producer in her field and has made over 200 transactions since 2006. She is a Certified Business Intermediary (CBI), a Certified M&A Professional (CM & AP), a Board Certified Intermediary (BCI), and has her B.S. degree from the University of Florida.
In her 17 years of experience, she has sold businesses in manufacturing, wholesale/distribution, service, retail, restaurants, professional offices, and more.
She has earned the prestigious million-dollar-plus award among her many accomplishments for 16 consecutive years. She has sold the most (dollars) in North Florida for the past three years.
As part of her process to list a business for sale, she offers free business valuations.
She maintains her professional networks by participating in the International Business Brokers Association (IBBA) and the Business Brokers of Florida (BBF).
One interesting fact about Bianca is that she used to be a business owner herself! She has been on both sides of the transaction when she purchased and later sold that same business. She finds that perspective invaluable when relating to her clients and balancing the many details and emotions.
She is licensed in Georgia and Florida and speaks fluent German.
To reach Bianca, email: [email protected] or visit her website https://www.myfloridabusinessbroker.com/