What Are The Key Features of Best Business Brokers?
In today’s business world of Mergers and Acquisitions (M&A), business brokers and Investment banks play a vital role. Business brokers differ from Investment banks by demonstrating an in-depth knowledge of the industry. They are considered to be experts in knowing the market segment, the key players, and growth opportunities in the field. As a result, they can bring best investment companies together at the right valuation.
Here are the key aspects of high-performance business brokerage firms or individuals:
- Sound knowledge of industry, the players, the growth opportunities
– Knowledge of the industry by the seller or buyer is absolutely necessary for determining the strategic fit between Seller and Buyer. This knowledge helps in many ways from assessing the value beyond the balance sheet to knowing the right players and creating the best deals.
- Strong network
– The top business brokers should be well connected in the industry. They are not only aware of the market leaders, but they are also connected directly to the owners, the decision makers, and the CEOs of companies. This is the key differentiation factor between effective and mediocre brokers. By being well connected, they can save a lot of time and frustration in finding the right fit, and the right partner.
- Familiar with the companies they represent and their needs
– High-quality brokers work closely with the businesses they represent and also know the business inside out. They are well connected with the owners or decision makers of the businesses to help navigate the transaction effectively and in a timely manner.
- Provide clear and concise information
– Since they are strategic thinkers, they provide the right amount of information in a teaser that helps the other party to make an initial judgment call. At every stage of the transaction, they are able to keep the hype of the seller and the downplay of the buyer under check.
- Scope the entire market for potential buyers or sellers
– This is very important because the best deal is when the best match is made. So the brokers that are widely connected and are very familiar with the industry can generate an effective list of ‘potential’ buyers or sellers.
- Diligently work through the transaction
– The good brokers make sure that the transaction goes smoothly by meeting and exceeding the needs of the seller or buyer they represent. They can help the companies dress up for sale, conduct preliminary due diligence to fill the gaps, review and update IP roadmap, strategic product pipeline, regulatory and environmental compliance, and ensure the necessary paperwork is in order.
- Providing the right valuation
– Arriving at the proper valuation for a company depends on several factors namely the profitability, debt level, market demands, intellectual property, product pipeline, competitiveness of products, etc. The broker should be able to provide guidance on the valuation based on all the factors. Moreover, managing expectations from the seller and buyers sides are critical in making sure the transaction is successful.
Blog post was written by Mahesh Sambasivam, Ph. D.
“Making M&A and Sustainable Growth Happen”