How to manage a business transfer agent that is not performing
You may appoint a business broker to guide you through the business sale journey and take the helm because of their expertise, experience, and connections to a vast network of buyers. When you sign up for their services, you essentially ask them to market your business for sale, attract interested parties and secure a suitable buyer.
Although when the results fail to come to fruition and your business broker shows no signs of progress, how do you tackle the feeling that they are underperforming and therefore, failing to hold their end of the bargain?
When signing up with a business broker, you sign a business broker fee agreement which sets out the terms of business, including a general outline of the responsibilities adopted by the business broker. If you believe that your broker is underperforming, start a conversation to discuss your expectations, such as the game plan and the corresponding timeline.
Why is there no progress with the sale of my business?
It’s important to remember that the early stages of the business sale process consist of plenty of behind-the-scenes activity to get the business into shape. While you may expect progress from the get-go, this stage is vital for essential preparations which may include to:
- brush up on the image of the business
- conduct a market appraisal
- prepare marketing collateral
- prepare and publish online business listings
- circulate marketing collateral to intermediaries and buyer networks
If there’s a tight deadline that you must abide by, inform your business transfer agent so they can operate with this in mind. This may be the case if you are approaching retirement, or you have other commitments that require your attention. If you intend to secure a buyer within a tight timeframe, it’s best to start the business sale process early.
If your business broker has failed to attract any genuine enquiries up to this point, ask them how you can increase the quality of enquiries. If your business has received any pushback from interested parties, this may be worth noting. For example, is the sale price perceived to be too high compared to similar businesses? Can the terms of the lease agreement be renegotiated? Is seller financing available?
There are common reasons why a business may fail to sell due to factors outside of its control, such as:
- Poor economic conditions
- High interest rates
- Sector pressures
- Legislative changes
If there’s economic uncertainty, potential buyers may hold their horses and wait for economic conditions to improve. High interest rates will mean that funding a business or taking out a mortgage may cost more, so buyers may bide their time. If there’s a budget announcement that is likely to restructure the tax system or impose restrictions on a particular industry or sector, this could change the appetite of business buyers to seek a business in a particular industry.
- Previous sales and acquisitions experience
- Sector specialisms and average success rate
- Sales value expectations and growth potential
Why might a business broker underperform?
A business broker may underperform if there are no incentives for them. While many reputable providers are highly trusted by business sellers across the country, there are a handful of disreputable business brokers that oversell their services with the hope of securing an upfront fee. Once this fee is received, the service is often unsatisfactory and yields minimal results, unless the broker is a trusted industry veteran.
When choosing a business transfer agent, choose wisely, and find a provider that comes highly rated. At Selling My Business, we have a long history of supporting business sellers and buyers, having sold over 12,000 businesses over 60 years.
How can I terminate a business broker agreement?
If you wish to exit from the broker agreement, read the terms of your contract and find the clause that relates to withdrawals and cancellations.
You may find that there’s a tie-in period, such as 6 months, during which you are unable to terminate the agreement and the business broker may have sole selling rights, as stated in the agreement. If you wish to terminate thereafter, you may be required to give notice, such as 28 days.
If you withdraw or cancel, advertising and marketing charges will typically be payable.
For more information on what to expect when selling a business and what steps can be taken if your business doesn’t sell, speak to a business transfer agent at Selling My Business.