What makes a good broker? What you should know before you appoint a broker.

We all know and have experienced the fishing (and frankly fishy) tactics of some brokers out there, but we at Gunner & Co. are known for setting the professional standards for the industry.

The poor sentiment I have noticed around the industry prompted me at least to share with you what I personally think an excellent broker or brokerage firm should be doing for you, if you are thinking of selling your business. 

Having had a very poor experience with another broker previously I found Gunner and Co. to be everything I feel I needed. They demonstrated an excellent understanding of the market from both a seller and buyer perspective, helped the negotiating process in the most professional way and were always available to provide updates, information and reassurance.”

Mark Dyer – Westcliff Financial Services

A thorough understanding of the market: Ultimately this is why you would work with a broker, over contacting various local companies yourself to see if they are interested in buying your business.  And this is actually a difficult thing to achieve. I would estimate there are over 100 active buyers in the market currently (many more if you count one-off purchasers). This gives you as a seller great choice, but only if the broker you are working with is constantly staying in touch with those buyers, and truly knows what they are looking for to facilitate genuine matchmaking. This is a full-time job in itself. A key question to ask is:

“How do you systematically maintain relationships with all the buyers in the market?”

Confidentiality at the forefront: You don’t want your business ‘touted’ around to any available buyer in your area – this would ultimately weaken your negotiating position.  Your broker should be talking about confidentiality from the get-go. They should only be sharing your details with a buyer with your express permission.  A key question to ask your broker is:

Will you share my information without my knowledge?” (Sadly, this happens far too often).

More about matchmaking: You want to work with a broker who is going to take the time to really understand you, your business and your culture.  Not just the one-dimensional financial results of your activities.  Why?  One of the most important outcomes I believe you should get from a business sale, is to be able to tell your clients that you have found a great home for them. With an even better service than they have now with you and your team.  And that means fundamentally you need to trust your buyers and feel a cultural alignment. 

Your broker’s role is that of a matchmaker, not a lottery player.  You don’t want to be introduced to 20 buyers to find the right one, a good broker will be experienced at matching companies for both cultural and financial fit (assuming they truly know the market – see above)

Complete independence: Just as many of you covet your independent status, so too should any broker you are working with. The vast majority (Gunner & Co. included) take their fees from the buying party.  Does that cause a conflict of interest?  If your broker has like-for-like terms with the buyers they represent they shouldn’t be swayed to recommend any one buyer over another for their own financial gain.  A key question to ask is:

“Do all your buyers have the same fee agreements with you? Do you have a special interest in any particular buyer?”

Bravery: We added a new internal company value to Gunner & Co. in 2019 – be brave. That means asking the difficult questions and stating the difficult facts (for example, no you can’t sell the shares of your business, given you did 200 DB transfers last year; or No, 4X recurring income is NOT the industry standard now). What you don’t want, is a broker who agrees with everything you say you want and leaves it to the market to tell you it isn’t possible. This not only wastes your time, but leaves you sorely disappointed.

Timing is everything: Go to market too early (when you are not genuinely ready to sell) and you risk alienating the buying community. Leave it too late, without a plan, and you won’t get the outcome you are looking for.  Don’t let a broker persuade you into meeting buyers if you aren’t genuinely looking to sell in the following 12 months.  In an ideal world, you will be building a relationship with your chosen broker for a year or two ahead of starting the process to sell your business – this allows you to stay in touch with market changes and shape your business accordingly.

Knowledge and preparation is everything when it comes to selling your business, as you are unlikely to be repeating the activity. Working with the right advisers is key, so take the time to get to know who will be right for you and your business aspirations..

Gunner & Co. are the only specialist broker that arms you with all the knowledge and insight needed to get the right deal for you. Join a workshop or webinar or book a bespoke market overview appointment.