There is nothing worse for a business owner who is selling than to have to change business brokers in the middle of the sale process. This can lead to major setbacks and/or a significant compromise to your asking price, leading you to not sell for an extended period of time and/or selling far below the maximum worth of your company. In this review, we take a close look at how you can find a Dallas business broker you can trust to deliver quality results.
Step 1: Create a List of The Best Busines Brokers in Dallas, TX
You can start by simply creating a list of the most trusted business brokers in and around the Dallas, Texas area. Most importantly, your list should only include brokers who have at least a decade of experience and do not charge high upfront fees (they are usually a scam and disincentivize the broker from selling for the highest price and best terms possible). If they do not have the optimal experience and/or do not offer the certification and licenses necessary to facilitate a deal without outside help (i.e. a real estate license), then you should avoid adding them to your list.
Of course, you also want to consider the location of the business broker. This includes their office location, but it also includes the area they service. Specifically, you should ensure the broker has experience working with clients in the Dallas, TX area. A broker who is located in Dallas but has not had many clients in the area may present a red flag as they are likely less familiar with potential buyers in the region.
Step 2: Clarify What Services Are Included in Their Service
You want a full-service business broker in Dallas, TX. This means the broker you choose should provide a professional valuation and help you close the sale, along with everything in between. If they only offer limited services or have a reputation and history of poor communication, then you should cross them off the list as they are likely to make the process more frustrating and stressful for you.
Step 3: Learn More About Their Pricing Model and Fees
Next, you should take some time to determine each business broker’s pricing model. There are two primary types of pricing models, which are upfront fees and success fees; some brokers may also charge a fee for a professional appraisal as well (valuation fee). Here is a look at the two types:
- Upfront fees: These are payments you make before you begin working with the business broker. They can range from $1,000 to more than $50,000. You should be wary of Dallas business brokers who charge upfront fees as you are taking far more risk.
- Success fees: Most experienced (and confident) business brokers in Dallas use success fees, also called commission fees. For this option, the broker is only paid once you sell your company. With this model, most business brokers charge 8% to 12%, depending on the size and value of your company.
We strongly recommend eliminating any business broker from your list that charges excessive upfront fees. Ideally, you should have one or two candidates left that are highly qualified and are paid based on the contingency that they are able to find a buyer for your business.
Step 4: Check Their Reviews and References
To further narrow down your list, you should consider the reviews and references for each potential Dallas business broker remaining. If a broker has numerous poor reviews, then the chances are you may also have a bad experience with them. If they have good reviews, then it can also help to request references and/or case studies as well. It is a great sign if a business broker is able to provide you with a reference or case study for other businesses within your industry and area.
Step 5: Receive a Professional Valuation
Once you narrow your list down to one (or possibly two) Dallas business brokers, then you can request a free business valuation. By this point, you should be able to trust the valuation you receive. Ideally, the broker uses a market approach, particularly if you are selling your company and need to know the worth of your business on the market. If you are not satisfied with your valuation or feel the broker did not go beyond the financials alone and consider the non-financial factors that impact the worth of your company, then you can receive a second opinion from another business broker in Dallas that is high on your list.
Step 6: Ask Them About Their Marketing Strategy
Lastly, after you receive a proposal and before you officially choose your business broker, you should learn more about their marketing strategy. It is important that you understand and are on board with the way your Dallas business broker approaches finding potential buyers. Specifically, you should ensure the broker only intends to leverage private and confidential marketing channels.
This can include databases, online websites, and their own personal connections. For instance, they may know other business brokers in the area who represent buyers, in which case they may contact them to see if their clients have an interest in your company. Whatever the case may be, the important thing is they have a proven system for finding buyers that you agree with and are comfortable with moving forward.
Step 7: Get Started
Once you are comfortable moving forward, then you can get started preparing your company for the sale. Your Dallas business broker may begin by reviewing your exit strategy goals and long-term vision, along with helping you prepare your information, draft your confidential information memorandum (CIM), and set your asking price and terms for the sale.
Contact Our Dallas, TX Business Brokerage Today
Are you considering selling your business in Dallas, TX? If so, our business brokerage can help you. With more than 600+ businesses sold in 20 years, along with high success rates, fair, success-based pricing, and a range of certifications and licenses, you can trust us to get the job done right. Get started today with a no-cost and no-obligation business valuation.