Many practices have developed for the benefit and convenience of business brokers. When working with a business broker 92143 trusts, you must look out for certain behaviors. The last thing you want is to end up with a lazy broker that gives no attention to the sale of your business. In this post, we will be taking a look at the key behaviors you should avoid when choosing a business broker in San Diego.
Overreliance on relationships with the financial industry
For years, investment banking has been an insider’s game with established players sharing deals with other established players. However, the internet has helped level the playing field by bringing a degree of transparency. Finding a buyer no longer requires you to buy a membership in the country club. However, it is good to note that there are some business brokers who focus on selling only to persons in their inner circles. While this might help you close the deal fast, it will keep you from selling for maximum profit. Selling to a private equity investor, for example, may cause a broker to be unwilling to put in the extra effort needed to secure a premium valuation with a strategic buyer. The ideal business broker 92143 should sell to the highest bidder and not simply sell to their friends.
Unwilling to align their financial interests with yours
Some business brokers will argue that a traditional success fee that is based on the ‘Reverse Lehman Scale’ aligns their incentives with yours. This means the higher the sale price, the more money the broker gets to keep. While this is true, there is another incentive that is created by traditional success fees: fast, low effort, low valuation sale is better than no sale. Consequently, most intermediaries prefer the fast, fairly good’ transaction to longer, higher-effort deals that might earn them more commission.
The process of finding, approaching, educating and managing potential buyers takes time and hard work. While it might take twice as long to sell, it offers the best opportunity to sell for maximum profit.
Jack of all trade
Last but not least, you should avoid brokers that take on just any business. In most cases, such brokers are just starting their practice and will offer mediocre support. The best business broker to work with in San Diego is one that has a specialty. So-Cal Business Brokers, for example, focuses on the sale of manufacturing, service, distribution, eCommerce and Hi-tech businesses. This specialty has enabled the brokerage firm to enjoy a success rate of more than 96%.