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Business Brokers in Calgary: How to Choose

Some people sell their businesses on their own but most business owners prefer to focus on their businesses and let someone else take care of the process. Depending on the size of your operation, you may choose a business broker in Calgary or an M&A (mergers and acquisitions) intermediary.

It’s important to choose the right fit. Someone who typically sells businesses with annual revenues over $5 million may not give you the requisite amount of attention if your business has annual revenues of $1 million.

Many sellers make the mistake of using an unqualified business broker. In Alberta, the sale of businesses is not regulated and anyone can act as your broker. Selling a business is far more complicated than selling a house or commercial property and requires thorough knowledge and a different skill set. It is very important to evaluate the the business brokers in Calgary, and choose someone with experience and knowledge with whom you are comfortable working.

Do your homework before making a selection. If you know other business owners who have sold their businesses, ask them if they were happy with the level of service and the outcome of the sale. You might also ask your lawyer, accountant, or financial advisor if they can recommend someone.

Otherwise, these are some questions you might want to ask some brokers or intermediaries:

How long have you been practising as a broker or intermediary in Calgary?

You’ll want someone with many years of experience, not someone who’s just starting out. One indicator of experience and credibility is a member of the International Business Brokers Association who has achieved the Certified Business Intermediary (CBI) credential. However, there are excellent brokers without that qualification. You may also want to ask them how many Calgary businesses have you sold in the last several years.

What do you know about my industry?

Someone who either specializes in businesses in your industry or, at the very least, has sold similar businesses will understand the unique nature of your industry. They may also have a list of potential buyers from marketing previous businesses.

What kind of marketing do you do to find prospective buyers?

If they simply list the business on their website or other online listings and wait for inquiries, it’s likely you’ll get a lot of tire kickers. Of course if it’s a small deal, that may be the only feasible approach. For larger deals though, a broker should conduct research in industry databases to uncover a list of prospective buyers.

How many listings do you typically have at any given time?

Ideally you want someone who doesn’t have too many listings, unless they have support staff to manage all the deals. It takes a considerable amount of time to prepare, market, screen buyers, negotiate, and manage the entire process.

How do you screen and qualify buyers?

If your broker doesn’t have a thorough screening process, and a serious qualification strategy, you’ll likely be wasting a lot of time on tire kickers. Your broker should have the capability to bring you only serious and qualified buyers.

Can I see one or more sample confidential information memorandums or selling packages from previous business you’ve sold?

If the packages they show you is very thorough or professionally done, it might be an indication of overall poor quality service.

How will you keep this process confidential?

Keeping the sale confidential is probably high on your list of concerns and you want to be comfortable that your broker takes all the necessary steps to ensure there isn’t a breach of confidentiality. You can check some of the listings on their websites. Sometimes the listings provide enough specific information that an employee, client, or supplier could easily determine it’s your business that’s for sale.

What are your fees?

Fees can vary from one broker to another. It’s not always advisable to choose a broker based on their fee structure. A seasoned broker who has higher fees may be able to get you a higher price for your business.

Can you provide me with references?

Speaking to a broker’s previous clients can shed some light into the quality of a broker’s services.

What to Expect from Business Brokers in Calgary

Once you have chosen an intermediary to work with, you will sign a listing agreement or engagement letter to sell your business. You will then have to provide all necessary information about your business to your representative so that he or she can prepare a marketing package and begin looking for the right buyer. The amount of information you provide, and the speed at which you provide it, will play a role in determining how long it takes to sell your business.

You will usually get to preview buyers (on paper) before information about your business is shown to them. When a buyer makes an offer through a Letter of Intent or Offer to Purchase, you can decide whether or not you want to work with that particular buyer. If you do, you will enter into negotiations and the buyer will perform due diligence before the sale closes.

Advantages of Using a Business Broker

Using a business broker or M&A intermediary has many advantages. Your broker should be able to help you manage the entire process, guiding you through the many steps that have to be taken. Brokers may know of potential buyers, understand how to market businesses, and are able to quickly eliminate tire-kickers so you don’t waste your time.

A business broker can also useful during negotiations, particularly if you are not comfortable with the negotiation process. And, of course, the intermediary can meet with buyers at his or her office, helping you keep the sale confidential.