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  • Writer's pictureJason Huett

Key Factors to Consider When Choosing a Broker to Sell Your Business

So, you've decided to sell your business, but where do you start? Many business owners head to Google and search for "business brokers near me" or "how to sell my business." While Google is an excellent search engine, it does require you to apply a bit of your own judgement and sometimes requires a bit more digging.

Google logo

In this article, we will talk about how to find and select a business broker (no, this isn't a shameless plug for our own services - like other brokers, we have our strengths and weakness which we'll outline in just a moment).

Key Functions of a Business Broker

There are many benefits to working with a business broker, but ultimately it boils down to (1) finding qualified buyers and (2) negotiating the deal. Just like you work in your business (or on your business) every day, business brokers work on selling others' businesses every day.

This gives brokers a tremendous advantage in terms of negotiation power and also provides them with line-of-site into metrics of dozens of businesses — some of which are probably fairly similar to yours.

Here's a list of skills and talents we believe are critical to being successful as a business broker:

  1. Valuation expertise

  2. Market knowledge

  3. Industry insight

  4. Sales & Marketing ability

  5. Negotiation

  6. Financial acumen

  7. Networking

  8. Buyer vetting

  9. Deal strategy

  10. Business experience

Within each of these skills, resides even more sub-skills. While we don't have time to dive into all of them, we will outline some of the more critical skills and sub-skills that business brokers possess. Every broker resides on the spectrum in each of these areas — you will want to find one that matches up closely to your needs. As a special treat, we'll also provide you with a list of questions you can ask any broker you are considering working with.

Four Critical Skills to Assess

For this exercise, we'll start with four skills from the list above:

Valuation expertise

This is a key area because most owners want (and need) to sell at the highest price possible. It's important to note that there is a significant legal difference between a valuation and an appraisal. Appraisals require a specific license in the State of Wisconsin — they are completed by licensed, certified appraisers.

Most business brokers will be providing you with a valuation or a "Broker Opinion of Value." For this, the business broker does not need to possess an appraisal license, but has been licensed as a real estate agent in Wisconsin and likely has an extensive history of financial management experience. When you seek lending from a bank, they typically will want an appraisal done on the commercial property portion of the deal (if your business is being sold with property). If you are selling your business only (with no property), banks may or may not require an appraisal. Typically, higher value deals require appraisals.

On the other hand, valuations are used by business brokers to assess the most likely price a business will sell on the open market. There are several widely recognized methods of producing business valuations:


1. Market Approach

  • Comparable Sales Method: Comparing the business to similar businesses that have recently sold.

  • Industry Multiples Method: Applying industry-specific multiples to financial metrics (e.g., revenue, EBITDA).

2. Income Approach

  • Discounted Cash Flow (DCF) Method: Projecting future cash flows of the business; discounting those cash flows to present value using a discount rate.

  • Capitalization of Earnings Method: Estimating future maintainable earnings; applying a capitalization rate to those earnings to determine value.

3. Asset-Based Approach

  • Book Value Method: Using the value of the business’s assets as recorded on the balance sheet; adjusting for depreciation and any undervalued (or overvalued) assets.

  • Liquidation Value Method: Estimating the net cash that would be received if the business’s assets were sold off and liabilities paid; typically used for businesses in distress.

4. Rule of Thumb Method

  • Industry-Specific Rules: Applying standard rules of thumb commonly used within specific industries; this method often involves simple formulas based on revenue or earnings.

Each method provides a different perspective on the business’s value, and brokers often use multiple methods to triangulate a final valuation. The chosen method(s) can depend on the business type, industry trends, and the purpose of the valuation.

The job of a business broker is not to tell you what your business is worth (there's actually no exact answer to this question); rather, it is to guide you to a range ($) that your business will likely sell for. This information is researched through the methods above while combining other data sets and then applying judgement to the equation.

Ultimately, a business is worth what someone is willing to pay for it.

Questions to ask a broker:

  1. "What method would you use to value my business?" (You're trying to assess mindset and financial sophistication).

  2. "Given a range of value for my business, what metrics would you focus on to push that value up?" (You're looking for metrics other than Gross Revenue and Profitability to surface in their answer.)

Sales and Marketing Ability

This is perhaps my favorite area because I've worked as a Chief Marketing Officer (CMO) for the better part of my career in all of the businesses I've owned. There is a distinct difference between Sales and Marketing — in layman's terms:

  1. Marketing = All of the work done before establishing contact with a qualified buyer. Examples: Marketing strategy, Target Audience, Core Messaging, Pricing strategy, Email, SEO, Social Media, Marketing Automation, Intent...this list goes on.

  2. Sales = The process of moving a qualified buyer to closing the deal. Example: a lead has established contact over the phone, has been vetted, and has indicated the possibility of purchasing your business.

This is oversimplified explanation — I write a lot about the topic of Sales and Marketing in business acquisition and commercial real estate.

Most brokers are fairly strong at Sales — the ability to quickly build rapport and move a prospect towards purchase is a vital skill. However, very few are good at Marketing which takes significantly more time to develop due to its strategic nature — Sales is definitely more tactical.

Marketing notebook

For the most part, large brokerages tend to focus on larger businesses — often $10 million in annual revenue and up. Smaller brokerages (like Collaborative Commercial) tend to focus on businesses with less than $10 million (annual revenue) which represents a majority of businesses across the U.S.

Questions to ask a broker:

  1. Aside from your personal network, your brokerage's database, and online brokering sites, how would you go about marketing my business? (These are the three most common ways you'll hear brokers talk about marketing - listen for other ways they plan to market your business).

  2. How long do you think it will take to sell my business? (You're gauging mindset again. Many times brokers will estimate 1-2 years. This is too long — I've worked in Marketing for a long time and nothing should take 2 years to sell. If it does, there's likely something wrong with the strategy).

Negotiation Ability

Negotiation is another critical skill that your broker needs to possess. When we hear this term, we often think about negotiation during the process of getting a deal put together.

Woman and man shaking hands

However, negotiation starts very early on in the process. In order to be an effective negotiator, it's critical to be able to read your prospect's body language, tone, and demeanor. This is incredibly hard, especially given that most conversations start via email. It's critical that your broker takes a hands-on approach and can get his or hands dirty by picking up the phone.

Another critical yet overlooked aspect of negotiation is a broker's level of organization. Every conversation, every email, and every phone call needs to be associated with notes in the broker's Customer Relationship Management (CRM) system. Having this level of detail is important legally, but also gives the broker the ability to reference the dozens of communications between a potential buying party.


Another important skill during the negotiation process is the intuitive sense of when to press hard on an issue versus when to back off. To be effective in this area, your broker will need to know where you stand in terms of Price and Terms of the deal — he or she will need to think like you.

Lastly, a skilled broker will have completed some personality-based training. For the past 17 years, I have worked with an Executive Business Coach and this skill is simply invaluable. There are many personality assessments which provide this training (I'm partial to DISC), but most all of them are fine.

This training helps the broker to understand the personality profile of potential buyers. And, they can be vastly different. An entrepreneur buyer acts, thinks, and responds much differently than a Private Equity (PE) investor who will put much more weight into the P&L and Balance Sheet. We treat these two differently because they think and act differently.

Questions to ask a broker:

  1. How would you describe your negotiation style? (Listen for answers that reflect adaptability to dynamic scenarios).

  2. Have you ever negotiated the sale of a business you owned? (If you're an owner reading this, you know that finding a broker that has actually done this for his or herself will be able to relate to you on an entirely different level — there's no replacement for this experience).

Business Experience

As you know, operating a business takes a diverse set of skills, especially in small businesses where an owner is involved on a day-to-day basis. These skills include business strategy, marketing, finance, human resources, sales, and a host of dozens of sub-categories.

While you may not consider yourself an expert in all of these areas, you probably have a strong enough skill set to jump into any of them if needed. Business brokers operate in a very similar fashion — we need to have a well rounded set of skills to manage every transaction. Some of these skills are more strategic and some more tactical.

When selecting a broker, you will want to find one that has the following qualities:

  1. Has experience selling businesses in the a similar price range as yours. While there's a bit of flexibility in this area, the larger the business, the more complex the financial structure can be. A broker who focuses on selling $300,000 (Annual Revenue) businesses will have a different skillset than a broker who regularly sells $5,000,000 businesses.

  2. A broker who can build rapport quickly. Your broker holds an immense amount of impact on your sale — they should be likable, trustworthy, and able to relate to others quickly.

  3. Diverse experience in business. Some brokers come from Corporate America whereas others come from a more entrepreneurial background. Find a broker who matches closely to the type of business you operate (corporate versus entrepreneurial).

  4. Creative. Regardless of a broker's background, creativity is paramount. You need your broker to be able to think outside the box, especially in areas that you don't have expertise like structuring a deal or recommending solutions to financing roadblocks. Remember, the commission you pay isn't solely for tactical aspects of getting a deal put together, it's for the decades of experience they are bringing to the table.

Questions to ask a broker:

  1. Have you ever owned and operated your own business? If so, how many years were you in business for? Did you exit successfully?

  2. What areas of business brokering are you the strongest?

  3. What separates you from other brokers?

Our Approach

In the beginning of this article I shared that I would disclose what our "superpowers" are. Because of my background as an entrepreneur, I prefer to work hands-on with business owners. Because I've been a business owner most of my life, I understand the importance of selling at an acceptable price, with acceptable terms. I've acquired three businesses and sold four of my own and loved the process each time.

In terms of unique abilities, I have decades of experience in Marketing. I love Marketing because I've found that the better story you tell, the more customers (buyers) fall in love with what you're selling. When this happens, price no longer is the limiting factor in the sale of a business — the conversation focuses on what the future can hold for the buyer which is exciting!

To read more about business brokering topics, head over to our blog.

To your success,

Jason Huett CEO | CMO | Business Broker


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