Choosing to hire a restaurant broker is a big step for those planning on selling their businesses- but it is all for naught if you hire a restaurant broker with no experience or technique. Hiring the wrong broker can be the difference between not selling at all and selling but losing money in the sale. That said, some discretion is necessary when discerning whether or not the broker you are hiring is the right one for you.
Like any industry, there are good and bad business brokers. Here are nine questions you should ask before you hire a restaurant broker.
1. How Long Have They Been in The Selling Business?
A good rule of thumb for when you are looking for a broker is to find one that has prior experience selling a business similar to yours. Selling a restaurant isn’t the same deal as selling a website. Successful restaurant brokers usually have connections to buyers in your industry, and additionally they understand the nuances of the restaurant industry.
2. Are They Genuinely Interested in Your Business?
The best brokers will take time to meet about their clients and learn why their clients are selling their restaurant. This enables the broker to negotiate a deal that best accommodates your desired financial and non-financial outcomes.
In addition, if a broker candidate demonstrates an interest in learning as much as they can about your restaurant during the first meeting, they will be in a better position to market your restaurant to the right prospects and have therefore demonstrated to you their interest in your business.
3. Do They Help with Sales Contract Preparation?
Any experienced restaurant broker should be able to assist with the drafting of legal arrangements and ought to have experience with the different ways to structure deals. Still, it is likely they will advise that you hire an independent legal team to review documents before they are signed.
4. How Many Listings Do They Have at The Moment?
Knowing how many listings a broker currently has, given they choose to disclose that information, is a subtle indication of how much time they can dedicate to your business. Too many and this could mean your listing won’t receive the attention needed to sell. Too few, and it could signal that they aren’t experienced, motivated, or capable. A reasonable number per broker shows an understanding between time and attention required of each listing. It is probably worthwhile to ask about the number of companies the broker sold in the past year as a way to gauge their selling abilities.
5. How Will the Broker Promote Your Sale?
Don’t settle merely for a broker candidate promising that they will attract the interest of qualified buyers. Expect to hear details about the strategy the broker will use to promote and market your restaurant. The best brokers will have a comprehensive promotional strategy that incorporates both online and offline tactics.
6. How Many Brokerage Offices Do They Have or Are They Affiliated With?
Another great question to ask. Not all brokers will co-broker on the sale of your business. If the broker does not agree to co-broker (a great portion of them do not) then the buying pool for your business is limited to that brokerage firm and their affiliated offices. Also, they are part of a national business brokers alliance, they are free to co-broker within their own organization.
7. What Other Industries Have They Sold Businesses In?
While it is not required for the broker to have industry experience, it is very helpful in maximizing values and ensuring a smooth transition. Find out how many businesses like yours they have sold in the past. If they have not successfully sold a business similar to yours, it might not be in your best interest to hire that broker. Consider looking until you find one that is experienced and qualified to handle your listing.
8. Do They Have Relationships with Lenders, Attorneys, and Tax Specialists?
It’s safe to say that the more relationships a broker has with attorneys, CPAs, and lenders, the fewer problems they will have making the deal. It is valuable for a broker to have relationships with CPAs that they can refer first-time buyers to, and it is imperative that they have relationships with tax specialists to assist with structuring the deal in order to minimize tax liability.
Business brokers are not attorneys. It would be un-wise to choose a business broker that prepares the closing documents behind closed doors. The more relationships a business broker has, the more control they will have over the deal and it is likely their success rate will be higher.
9. Do You Assist with Creative Financing?
In a world of recession and debacle, where banks are more than hesitant to lend, the seller must have near perfect credit, suitable percent down, collateral, and industry experience. The typical in typical financing is not so typical anymore. Therefore, you need to hire a business broker that understands the new era of industry, one that has experience in creative financing. This will ensure your business has the best chance of selling for the highest maximum price.