Russell Wilson has led the Seattle Seahawks to more come from behind 4th quarter & overtime victories than any prior quarterback at this stage of his career. (Read More)
The reason this has occurred 23 times already in Russell Wilson’s career is because Russell Wilson has the knowledge, experience, and professional skill set to achieve desired outcomes on the field and the Seattle Seahawks have a performance driven corporate culture with strong personnel, support infrastructure, & leadership.
If a timely sale of a business is desired, it is critical that an entrepreneur select the right team & quarterback to facilitate the transaction.
This selection should start with an assessment of the corporate culture of the business brokerage firm. Does the firm have a “winning” performance based culture? Success in business brokerage is judged by completed transactions. Questions should be asked of potential representation regarding how many transactions the firm has successfully facilitated, how many deals a specific business broker has successfully completed, and the percentage of clients successfully sold in the last year. The Seattle Seahawks have won about twice as many games as the Cleveland Browns during the last ten years. This speaks of a culture of performance & success in one organization and a culture of mediocrity in the other. The same cultures are found in business brokerage firms. Selecting a “winning” business brokerage team is the first step toward a successful business sale.
If a fast sale of a business is desired, it is important to evaluate if the motivations of the business owner and the broker are in alignment contractually. The best way to motivate a salesperson to perform is to make their compensation performance dependent. Business brokerage firms that charge retainers & administrative fees are not as motivated to complete projects, as ones paid 100% on commission. Payment up front for business brokerage services conveys a motivation of personal remuneration while payment at time of sale conveys confidence in performance. In addition to evaluating compensation in a representation contract, a business owner seeking to sell their company should evaluate the term of the agreement. A short-term agreement (Typically 6 months for a business brokerage firm with a performance culture) conveys confidence in the timely completion of the project. A longer-term agreement can convey lack of confidence in their sales ability and a desire to tie up the business owner legally.
Selection of a “winning” business brokerage team whose motivations are in alignment with the business owner is the first step an entrepreneur should take when desiring a fast sale of their business. However, even more important than selecting a business brokerage firm with a track record of performance is selecting the right business broker for the project. The New England Patriots won last year’s Super Bowl because they had Tom Brady at quarterback. Anyone who watched the game knows that without Tom Brady the Atlanta Falcons would have been Super Bowl Champions.
The following are five characteristics commonly found in business brokers who have the ability to facilitate business sale transactions in 3 – 6 month periods from listing to closing. Every business owner desiring a timely sale of their business should want a business broker equivalent of Tom Brady or Russell Wilson quarterbacking the project.
- Ability to Properly Value the Business Incorporating Current Market Conditions – Business valuation is a subjective science. Value a business too high and it will sit on the market with limited activity. Value it too low and a business broker paid 100% on commission will leave dollars on the table for their client & themselves. Knowledge & experience are fundamental to the proper valuation of a privately held company or family business. Requesting information regarding asking to sale price relationships for prior projects is prudent research by a business owner assessing a business broker’s ability to properly value & price businesses.
- Ability to Present the Business to Potential Buyers – A willing & able seller needs a willing & able buyer to complete a transaction. Buyer location & prequalification can take significant time. The best business brokers have the ability to get an opportunity in front of qualified buyers shortly after it enters the market. An entrepreneur seeking a timely sale should understand the marketing programs employed by a business broker prior to executing a representation agreement.
- Ability to Persuasively Sell the Business – The professional sale of a business is a sophisticated, nuanced process requiring knowledge, experience, and ability. Business buyers have numerous companies to consider for acquisition. The best business brokerage professionals have the ability to create a marketplace for a company and close the sale with a buyer. Everyone has heard a fishing story about the big one that got away. No motivated business seller wants to see their potential buyer walk away from the negotiating table and start the process over because their business broker does not have the ability to get the fish in the boat.
- Ability to Facilitate Due Diligence, Legal Documentation, & Financing – Business sales that fail between LOI and closing typically fail because a proper due diligence process is not facilitated, agreement is not reached on the final legal documentation for the transaction, or capital is not secured to fund the acquisition. Business brokers that have the ability to successfully facilitate due diligence, legal negotiations between attorneys & parties, and help secure financing close a higher percentage of transactions than business brokers lacking the ability. Successful, experienced business brokers are familiar parties in the legal, accounting, & banking professions and have common success stories with professionals that serve the business community. If a business broker cannot provide referrals of accountants, attorneys, and bankers they are likely inexperienced or not viewed positively by those professionals.
- Industry & Transactional Knowledge – Many business sales require industry & transactional knowledge regarding “best practices” for transitioning ownership. If a business broker does not have knowledge & experience transferring relevant licenses, permits, and contracts the time required to successfully transfer ownership can be extended. Motivated parties want to complete transactions. Nothing is worse than having a transaction placed in a holding pattern because paperwork was not filed, filed late, or was incomplete at time of submission to the relevant party because a business broker is learning on the job.
IBA is commonly regarded as the “top gun” for hire in the Pacific Northwest for the timely sale of businesses at “fair” market values while employing “best practices” throughout the sale process. Our standard representation agreement is six months and 100% of our fees are paid on performance at completion of the sale. Our brokers are knowledgeable, experienced, and professionally trained with a track record of successfully completing transactions that achieve client goals & objectives. If you would like to sell your business in 2018, please contact our office at (425) 454-3052.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, and mergers & acquisitions community on subjects relevant to the purchase & sale of privately held companies and family owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.