Category: Business Brokers

Let me tell you about the $40,000 mistake I almost made. A few years back, I was sitting in a cramped conference room across from a broker who had the handshake of a guy who sells timeshares for a living.

Smooth. Confident. Knew all the right words.

And I was about ten seconds from signing an engagement letter that would have locked me into a six figure commission structure that made absolutely zero sense for my situation.

My gut was screaming at me from somewhere around my stomach, but you know how it goes. You get excited. You see dollar signs. You tell yourself this guy knows what he’s doing.

Thankfully, my accountant caught the fine print. Saved my bacon. And ever since then, I have become that annoying person who asks way too many questions before signing anything. 🕵️

So if you’re thinking about hiring a business broker to sell your company, or maybe buy one, this one’s for you. Here are the seven questions I wish I had asked before that conference room disaster.

Sit down. Grab a coffee. Maybe take notes.

What Exactly Is Your Track Record in My Industry?

This one sounds obvious, but hear me out. Plenty of brokers, like the ones at San Jose Business Brokers Ltd (this is their website: sanjosebusinessbrokersltd.com), will tell you they’ve “done deals in your space” without actually, you know, having done deals in your space. Ask for specifics.

How many businesses in your sector have they sold in the last two to three years? What were their valuations? What percentage of their listings actually closed?

Because here’s the thing. A broker who moves dental practices for a living might be fantastic at that.

But if you’re selling a manufacturing operation with equipment and contracts and a whole different set of headaches, you want someone who knows the terrain. The buyer pool is different. The due diligence is different. Everything is different.

How Do You Get Paid, and When?

Ah, the money question. The one that makes everyone squirm a little. 😅

Let’s break it down into bite sized pieces:

1. Commission structure. Is it a percentage? A flat fee? A tiered system? Get it in writing and make sure you understand exactly what triggers payment.

2. Exclusivity. Are you locked in? Can you work with other brokers? What happens if you find a buyer on your own?

3. Retainer fees. Some brokers charge upfront. Some don’t. Some do a hybrid. Ask whether the retainer gets credited against the final commission or whether you’re just paying for the privilege of being told “we’ll get back to you.”

Get all of this hammered out before anyone signs anything. Trust me on this one.

How Many Listings Are You Currently Handling?

This matters more than most sellers realize. A broker with 47 active listings and an assistant with a cold coffee problem is probably not going to give your business the attention it deserves.

Ask how many clients they’re juggling. Ask how they prioritize. Ask what happens during their busy season.

You want someone who is active but not drowning. It’s like a good bartender. You want them busy enough to know what they’re doing. Not so slammed that they forget your drink order. 🍸

What’s Your Communication Style?

Some brokers send weekly updates with charts and graphs and a little narrative summary. Others send you a text that says “talked to a buyer today. Good vibes.” You need to know which one you’re getting before you commit.

Ask how often you’ll hear from them. Ask who your point of contact is. If it’s a junior associate, you deserve to know that upfront. Ask about response times. Ask whether they prefer email, calls, carrier pigeons.

This is not a minor detail. I have seen strong deals fall apart because the broker went radio silent for three weeks and the seller panicked and took a lower offer from a direct inquiry. Communication is not a soft skill in this business. It’s the whole ballgame.

Who Is Your Typical Buyer Pool?

Every broker will tell you they have “qualified buyers lined up.” Cool. Who are they? What do they look like? Are they strategic acquirers? Private equity shops? Individuals looking for a career change? A mix?

Understanding the buyer pool tells you a lot about how your business will be positioned and what kind of process you’re in for.

If the broker’s entire network is independent operators looking for small acquisitions, your $8 million industrial services company might not be their sweet spot.

What Do You Need From Me to Be Successful?

This is the collaboration question. It flips the script a little. Instead of asking what the broker can do for you, you’re asking what the broker needs from you to actually make this work.

The answer should be specific and reasonable. You should hear things like clean financials, organized documentation, reasonable availability for meetings and due diligence calls. If the answer is vague, like “just let me do my thing,” that’s a yellow flag.

A good broker knows that the seller’s cooperation is a critical piece of the process. If they can’t articulate what they need, they probably haven’t thought about it much.

Can You Walk Me Through Your Process Step by Step?

This is the final one. The closer. And honestly, it might be the most important.

Ask the broker to walk you through the entire journey from engagement to closing. What happens in the first week? How do they market the business? How do they screen buyers? How do they handle negotiations?

What about due diligence? What about the final transition period after closing?

A great broker can describe this process without breaking a sweat. A mediocre one will start shuffling papers and saying things like “well, it depends on the situation.” That’s not a process. That’s a shrug.

Final Thoughts

Look, I’m not here to tell you all business brokers are shady. Plenty of them are sharp and honest and genuinely good at what they do. The one I almost signed with was probably fine for someone. Just not for me. The point isn’t paranoia. The point is preparation.

You wouldn’t hire an employee without an interview. You wouldn’t buy a house without an inspection. So don’t hand over your business, probably your biggest asset, without asking the hard questions first. That’s just good business sense. 😉

Get the answers in writing. Take your time. Trust your gut. Your future self will thank you.