7 top tips on instructing a business agent to sell your company
Having sold her business to the ‘wrong buyer’ in 2005, Denise Barnes reveals how to find an expert to sell your business for you and avoid her mistake
If you’re serious about selling your business don’t even consider selling it yourself.
This is a major step in your life which requires the experts yet some business owners baulk at the price. They think they can save thousands, and sometimes tens of thousands of pounds, by doing it themselves.
But a good agent should be able to give a reasoned assessment as to the value of the business, has the right contacts, knows where to advertise, and already has a list of names of people who are seriously looking to buy the kind of business you’re selling.
This search takes up a lot of time and that’s what you’re paying for. An experienced business agent is worth his or her weight in gold. But you must choose one even more carefully than if you were placing your house on the market.
Your business may be worth far more than your property, and you will have an even stronger attachment to it, having injected your blood, guts and money into it for years or even decades.
So here are some top tips to help you make the right decision when it comes to choosing the business agent.
1. Try to use an agent who has been recommended
This is not always easy as you will want to keep your exit plans close to your chest, but keep a look out for recommendations at networking events and conferences etc. Do some background checks and ask if you can speak to any previous clients.
Interview at least a couple of agents and choose the one based on their track record, expertise, cost and service provided, but not necessarily who comes up with the highest valuation. They may inflate the price just to secure the instructions.
2. Go to one of their presentation events
This can give a good indication as to the professionalism and scope of the agent, though there is no guarantee they will be the right agent for you. Don’t discount the smaller company.
They may not give an all-singing, all-dancing presentation, but are probably just as professional and might offer a more personal service. The only snag is that they may be local, and remember – people talk.
3. Meeting the agent. Beware first impressions.
Don’t be persuaded by good looks, engaging smiles, a winning personality, and an ooze of charm. Yes, it’s good to do business with nice people, and it’s imperative you have a rapport with the agent.
You’ll be working together for several weeks, maybe months, and you need to trust them implicitly. You are putting your precious business in their (hopefully) capable hands and paying them a hefty fee for a successful completion. But don’t over-rule the quietly-efficient agent.
4. Be prepared to ditch them
If there’s anything about the agent that strikes you as unprofessional, or you feel uncomfortable in any way, no matter how far down the line you are, act on your instincts and ditch them.
5. Wait until the agent suggests an asking price
Before revealing your hand let him or her give you a valuation. Have your accountant give you a realistic idea before the meeting so you know roughly what to expect.
6. Negotiate the best possible terms on the agent’s commission
There may be bigger reductions than those first offered. Don’t forget VAT will be added. Be wary if the agent says s/he is willing to reduce the commission further if you sign up immediately. This is not ethical practice.
7. Never sign an agreement with the business agent on the spot
This goes for any contract, but it’s amazing how easy it is to get carried away by the excitement of the moment and sign up with the agent without looking closely at the terms and conditions, including the small print.
It may state you are liable for the agreed fee of the eventual offer, even if you don’t actually achieve it.
You should let at least one other person examine it in case you’ve missed something. A solicitor is an ideal person. But in any event, take the unsigned contract away with you.
I do wish you the very best of luck!
Startups readers can get a copy for a discounted rate of £8.99 by visiting: www.politicos.co.uk/promotions and entering the code STARTUP.