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In many lines of business there are companies that can give the whole sector a bad name.
Sadly, the business broker sector is no different.
Understandably and quite rightly business owners looking to sell their company will
usually talk to several firms when looking to choose a business broker. They want to
appoint a broker that they can work with and who will achieve the best possible price.
There are a number of reputable trustworthy brokers operating here in the UK but unfortunately
there are also a handful of brokers that have a very different business model to the rest
Let's look at the main differences between the three types of business broker, we'll
call them Broker A, Broker B and Broker C.
Business Broker A plays the numbers game. This broker takes on as many instructions
as possible knowing that a small percentage of these businesses will eventually sell.
Once instructed Broker A lists the business for sale with the internet aggregators and
sits back to wait for the phone to ring, which of course it doesn't very often. Broker A
has a small team of people dealing with 100's of instructions at any one time and its commission
rates tend to be very high.
Business Broker B also plays the numbers game but for a different reason. Broker B's main
source of income is upfront fees. Broker B employs salespeople to deal with potential
clients and these individuals' targets and remuneration are based on the number of instructions
and the upfront fees they extract. There is no logic to many of the valuations given by
Broker B, it's more a case of - i'll tell you what you want to hear if you pay me chunky
fee. Broker B will also tell you that it has a large number of buyers on its books looking
to buy a business like yours. Like Broker A, once instructed Broker B will list the
business for sale with the internet aggregators and wait for the phone to ring.
Business Broker C on the other hand is not interested in having a large volume of businesses
for sale on their books. Broker C is entirely focussed on completing transactions to the
client's satisfaction. Broker C will value a client business realistically and in line
with the sector and current market conditions. Broker C employs experienced senior executives
who take ownership of the whole process from the initial valuation through to a successful
completion. Broker C will not just list its clients businesses it will proactively seek
out qualified prospective buyers. Broker C's remuneration comes mainly from the success
fee it charges when a business sale completes.
So please be very careful when looking to choose a business broker. We are not for one
moment suggesting that Ventura is the only broker to use. There are a number of other
very good, ethical and trustworthy firms you could instruct when the time comes to sell