Questions to Ask a Broker When Selling a Business
Questions for interviewing a business broker before you sign an engagement: track record in your sector, how the fee and exclusivity clauses work, how confidentiality is protected, and how buyers are found and qualified.
The questions
Open any question for the note
How many businesses like mine have you sold in the last two years, and at what sort of prices?
Why ask it
Sector and size matter more than total deal count, because the buyer pool for a manufacturing firm looks nothing like the one for a dental practice. Ask for the last two years specifically, since brokers often quote a career total that includes a very different market.
Will you personally handle my sale, or does it move to someone else after I sign?
Why ask it
It is common for a senior broker to win the mandate and a junior to run the process. Ask who takes the buyer calls and put that name in the agreement, because the person in the room now may not be the one negotiating your price.
What do you think my business is worth, and what are you basing that on?
Why ask it
You want a method: a multiple of adjusted earnings, comparable transactions, or asset value, with the reasoning shown. An unusually high figure with no working behind it is the oldest way to win an instruction, and the price gets revised downward once you are locked in.
Will you put that valuation and your reasoning in writing before I sign anything?
Why ask it
Willingness to commit on paper separates an assessment from a sales pitch. If the written version arrives lower than the verbal one, you have learned something important at no cost.
How is your fee structured: retainer, success fee, or both?
Why ask it
Large upfront retainers with a small success fee reduce the broker's incentive to actually close. Ask what proportion of their income last year came from retainers rather than completions, and treat evasion on that question as an answer.
What is your minimum fee, and does it apply if I sell to a buyer I already know?
Why ask it
Minimum fees can swallow a large share of a smaller sale price. If a competitor, a manager or a family member is a realistic buyer, get them carved out in writing now or you will pay full commission on a deal you sourced.
How long is the exclusivity period, and how do I exit if it is not working?
Why ask it
Twelve months of exclusivity with no performance conditions leaves you stuck with a broker who has gone quiet. Ask for a break clause tied to something measurable, such as a number of qualified buyers introduced by a given date.
Does the agreement have a tail clause, and how long does it run after we part?
Why ask it
A tail means you still owe a fee if you sell later to anyone the broker introduced. Reasonable is a defined list of named contacts for a limited period; unreasonable is any buyer, for two years, whether introduced or not.
How do you keep this confidential from my staff, customers and competitors?
Why ask it
Ask for the mechanics: a blind profile, a non-disclosure agreement before any detail is released, staged information release. Brokers who talk about confidentiality only as a principle rather than a process are the ones whose listings get recognised.
At what point does a buyer learn my company's name, and who decides?
Why ask it
You want that decision to be yours, deal by deal, in writing. The most damaging leaks in a sale process happen early, to a competitor who requested information under a plausible cover.
Where will you market this, and what will the listing actually say?
Why ask it
Ask to see a draft. Generic listings on a single portal are cheap for the broker and slow for you, while a sector-specific approach and a direct approach list suggest real work is planned.
Who is already on your buyer list for something like mine, and are any of them active right now?
Why ask it
A broker with a genuine list can describe buyer types and current mandates without naming names. Vagueness here usually means your business will simply be advertised and the buyer pool built from scratch.
How do you check that a buyer can actually fund the purchase?
Why ask it
Proof of funds, a lender's letter, or evidence of prior acquisitions are the answers you want. Weak screening costs you months of due diligence with someone who was never in a position to complete.
How many buyers would you expect to reach an offer, and how many deals like mine reach completion?
Why ask it
Real completion rates are lower than most sellers expect and an honest broker will say so. A confident promise of a quick sale at your asking price is a warning rather than a reassurance.
What will you need from me before we go to market, and how long will that take me?
Why ask it
Preparation usually means three years of accounts, normalised earnings, contracts, leases and staff details, and it lands on you rather than the broker. Knowing the workload up front prevents a listing that goes live before it is ready.
How long do sales like mine usually take from listing to money in my account?
Why ask it
Ask for the range from their own recent deals rather than an industry average. The gap between offer accepted and completion is where most of the time goes, and a broker who only quotes time to offer is measuring the wrong thing.
In your recent deals, how much of the price was paid at completion and how much deferred?
Why ask it
Headline prices often include earn-outs, deferred payments and seller financing that may never fully arrive. This question turns an impressive sale price into the figure you would actually receive on the day.
Who negotiates: you, me, or my lawyer, and who has the final say?
Why ask it
Brokers vary from making introductions to running the whole negotiation, and the fee often does not reflect which. Be clear that no offer is accepted or rejected without you, in writing.
What would you fix in the business before we list, and what would that cost me?
Why ask it
Useful answers are concrete: customer concentration, owner dependence, unsigned contracts, messy accounts. A broker who says the business is ready as it is either has not looked properly or wants the listing more than the sale.
Which of your last five instructions did not complete, and what happened?
Why ask it
Everyone has failed deals, and the way this is answered tells you the most of any question on the list. Candour about a buyer who withdrew or a valuation that was too high is a better sign than an unbroken record of success.
Choosing and Engaging a Broker
Practical guidance for the conversation itself
Before you meet anyone
- Interview at least three brokers. The differences in fee structure and exclusivity terms are usually larger than the differences in what they promise.
- Work out your own rough valuation first, from adjusted earnings and any comparable sales you know of, so you can tell an optimistic pitch from a considered one.
- Decide what you want from the sale beyond price: speed, staff kept on, a clean exit, or a handover period. It changes which buyers are right and which broker suits.
- Ask each broker for two references from completed sales in the last year, and phone them.
Terms worth reading closely
Exclusivity and break clauses
Aim for a period tied to activity rather than the calendar, with a way out if agreed milestones are missed. Sign nothing that renews automatically.
The tail clause
Narrow it to a written, named list of buyers the broker introduced, for a defined number of months. A tail covering any buyer at all can leave you paying commission on a sale the broker had nothing to do with.
Carve-outs
If a management buyout, a family transfer or a known competitor is a realistic outcome, exclude those buyers or agree a reduced fee for them before you sign.
What the fee is calculated on
Check whether commission is charged on enterprise value, on the headline price including deferred amounts, or on cash actually received. The three can differ substantially, and only the last one matches your bank account.
Warning signs
- A valuation well above the others, produced quickly and without workings.
- A large non-refundable retainer paired with a small success fee.
- Reluctance to name the person who will actually run your sale.
- No documented process for releasing information to buyers in stages.
- Pressure to sign at the first meeting, or a discount that expires that day.
Keep your own advisers
- A broker is not a substitute for a lawyer on the sale agreement or an accountant on the tax position. Ask about both, but take the advice from someone with no fee riding on completion.
- Get tax advice before you agree a structure, since share sales, asset sales and earn-outs are treated differently and the choice is hard to reverse later.
- Have your own lawyer review the broker's engagement letter, not just the eventual sale contract.
- Keep your own records of every buyer introduction, in case a tail clause is disputed after the engagement ends.