How to Choose a Business Brokerage Firm

As difficult as it is to think of a time when your school might have to be sold, you should always be prepared for the unseen and even the unthinkable. Selling a school is a full-time job, and it’s not something a you should be trying to do while still running it. Not only are you emotionally attached to your business, but you are also dealing with daily operations, employees, financing, and more. That leaves little room to protect the confidential nature of the sale, qualify buyers financially, exchange information, coordinate showings, negotiate, and so on. That’s where a business brokerage firm comes in.

Business brokerage firms assist buyers and sellers of privately held businesses with the sales and purchase process. A business brokerage firm will:

• Make sure your school is always ready so that, should the unexpected occur, rather than having to market it at a distress sale, you can get the highest price for your school.
• Find a pool of potential qualified buyers for your school.
• Educate and present facts.
• Negotiate the deal structure.
• Coordinate key participants, bridge any gaps between you and the buyer, and keep everyone focused.
• Control every step of the transaction and maintain deal momentum.
• Identify and interface with professional support, such as attorneys, accountants, and appraisers.
• Maintain confidentiality.

So, how do you choose a business broker? Start by building a shortlist of candidates, asking for referrals, and looking for the following qualities.

Look for a business brokerage firm that’s able to provide counsel or information that is backed by hard-earned experience and methods that have been proven many times over. They should have years of experience with negotiating deal structure, controlling difficult buyers, blocking the competition so they do not become aware of the sale, and managing crucial timing issues.

They should also have relationships with experienced affiliates and vendors, along with an excellent track record for seller and buyer education. Most importantly, they should use time-tested, proven best practices for ensuring that policies, procedures, and protocol are all in place to protect you throughout the sales process.

For the successful sale of your school, it is helpful to be able to develop a bond with your business brokerage firm. Therefore, interview the brokerage firms on your shortlist exhaustively until you find one you’re confident is trustworthy and able to protect your interests first. The best seller and brokerage partnerships are those where all parties like—and even look forward to—working with one another. This makes it easier to ask your business broker for advice and get a ready and immediate answer.

A business brokerage firm that works collectively as a team is your best bet; however, you should not be made to feel you are being passed around to the “next available broker.” Find out which brokerage firms will provide one team leader and point of contact for the whole process. Don’t forget to ask if your point of contact will be available to answer your questions, not only during standard working hours, but also after.

Look for a firm that is able to design a distinct marketing campaign tailored for your school. You also need to be sure the firm can protect and maintain the confidential aspect of the sale throughout the entire marketing process. For example, they should be able upload your listing on the many business listing sites, pre-approved by you, that conceal the identity of the business.

Once the valuation and ad creation are in place, they should be able to search in their own database for buyers and contact the groups and individuals whose acquisition criteria match the parameters of your new business listing.

Ask the brokers on your shortlist how big their database is, and if it has a good mix of institutional buyers, private equity groups, family offices, and high-net-worth individuals. That, along with long-established relationships with professional affiliates, should be the cornerstone of the business brokerage firm you choose. Global outreach is important, too, along with knowing how to handle the sale if a buyer is not from the US.

In addition to having a database of potential buyers, you’ll want a business brokerage firm that also has solid relationships with tax attorneys, financial planners, business attorneys, and CPAs, just to name a few.

The best business brokerage firms understand that the sale of your business is not the end of their relationship with you. Interview for a business brokerage firm that demonstrates, after closing, they can follow up with everyone involved in the transaction to make sure contracts and responsibilities are being met. Here’s a tip for determining follow-up ability: check referrals. If more than half of the business of a brokerage firm on your shortlist come from referrals, and they have sold multiple businesses multiple times, it is likely due to excellent work throughout the sales process and after closing.

The best business brokerage firms are full of licensed professionals with personal qualities that include self-motivation, excellent organizational skills, ethics, outstanding communication and negotiation skills, and financial management. They should have a demonstrated ability to analyze statistics, have diverse industry knowledge, and be detail oriented. And, they need to show they can create business valuations, recast business financials, use business components to negotiate transactions, and be pros at non-disclosure agreements and other confidentiality instruments.