Let’s be clear that if you are a practitioner considering the sale of your practice and you call all the brokers in the market, some brokers will state platitudes, false promises, and you will be set up for an “over promise/under deliver” level of service. This is because most would-be-sellers do not know the right questions to ask and are more concerned about risk than they are about service…and the brokers know it.
So, what should you be asking? Risk is a huge concern and not knowing who the eventual buyer is creates anxiety. The simple answer: get all cash because this takes care of all concerns. So, some brokers tell everyone they can sell for all cash…literally EVERYONE. But does “all cash” minimize risk? No, not really. What it does is minimize the pool of would-be-buyers and as caveat emptor (buyer beware) has faded in legitimacy over the years it opens you up to a future lawsuit if things do not go well for the buyer. The best way to minimize your risk is to find the buyer that is the best fit for you, your staff, and your clients. A quality fit is going to improve retention, buyer success, and everyone’s post sale comfort. To do this you need a broker that is diligent in finding, developing, and presenting quality candidates.
The questions you should be asking a broker are how do they find buyers, do they have a process for evaluating buyers, how do they evaluate buyers, are they the main point of contact for buyers (or do they just send buyers to you for you to qualify), and how involved are they with you and the buyer throughout the process?
Which leads me to the second, and most important, thing to understand about brokers. Many of the firms in the market that present themselves as brokers do not actually function as brokers. Several are simply marketing companies that convince you to hire them (often with statements of all-cash), market the sale of your practice, send every single buyer lead to you (whether the buyer is qualified or not)… oh, there goes your confidential sale by the way…, and then disappear from the process only to reappear and collect their fee after you have done all the qualifying, negotiating, disclosures, documenting, due diligence, and on and on.
A true broker is an intermediary, a go between, who works with both the seller and buyer to package the sale, develop buyers, evaluate buyers, maintain your confidentiality, inform, educate, verify disclosures, negotiate, advise you on offers and next steps, document, assist with due diligence, assist with financing, draft counter offers, draft purchase agreements, provide transition advice, and guide the parties to closing. It is a lot of work and requires a lot of time to provide this level of service, but it is the value you should be receiving for the fee you will be paying. (Note: a broker can only provide this level of service to about 20 clients at a time before it gets watered down. Brokers with 30, 40, or more listings are likely just marketing companies).
So what should you be asking to uncover whether you are talking to a true broker or a marketing company? Ask about their process and how they market your sale, in response they should mention developing and sending out a report on your practice to buyers. When they do, ask one question: In the report whose contact information is provided for buyers to follow up with? If they put your contact information in the report, you are talking with a marketing company. A true broker will be the point of contact, field all the follow-up to the report from buyers, maintain your confidentiality, and remain front and center with the buyers as they work for you.
Sadly, these questions are not the focus. Instead many would-be-sellers continue to engage "brokers" who offer platitudes, false promises, and provide a level of service that is over promised and under delivered. Do not fall into this same trap by being baited with statements of “all cash,” “simple to sell,” “you don’t need to be involved with transition.” Selling is a big step and you owe it to yourself to ask the important questions and find out what level of service the broker is going to provide to earn the fee you will be paying.
ProHorizons is a full-service broker with a sole focus on the sale and acquisition of practices in the tax and accounting industry. We take pride in providing a high level of intermediary service in the market, which we have continued to hone and perfect over the 20 years since our firm was founded. Call Ken Berry, CBI (Certified Business Intermediary) at 408-598-3009 to find out more. If you are not ready to talk yet, you can simply request our Standards of Service document which outlines the service we provide and compares it with some of our competitors.