When it comes to selling a business, there is something about using a local business broker that provides a feeling of warmth and comfort. Despite how a local broker may make you “feel”, many grossly overestimate their ability to help operators in our industry. Before you place the most valuable asset in your life into the hands of a local broker, I encourage you to ask him a couple of tough questions:
1. You say you have buyers. Can you qualify exactly what that means for my business?
Of course a local business broker has buyers in your area. But are the buyers really interested in chauffeured transportation? If so, why? Just because a “name on a business card” wants a profitable business in your area, doesn't mean that he is a qualified buyer for your business.
Further, if the buyer is qualified, what happens if he doesn't buy the business? How will the local broker produce additional leads? Too many times, we see business owners stranded in 12 month listing contracts with a local broker who has no real ability to produce a consistent flow of qualified leads. Selling a transportation business can be a complex process that in order to be successful, requires many moving parts to come together. A few to consider:
• Substantiating business value (including a moving and depreciating fleet) to a lending institution to secure financing. This can be a huge roadblock/deal breaker for local brokers.
• Getting an insurance source in place for the Buyer, (required before closing, Non industry specific brokers rarely succeed.)
• Understanding the capital requirements, moving forward and explaining these to accountants and lenders
• Explaining and justifying transportation business ‘add-backs' to buyers in a way that enables them to accept and pay for them.
If you bet the future of your business on one prospective “buyer,” the probability of losing big is great. CTA maintains the most extensive database for chauffeured transportation business buyers in the world. We deliver success to our clients by driving a constant flow of buy-sell traffic that is focused entirely on our chauffeured transportation industry. Our selling process produces more buyers, which equals more offers and ultimately the best possible chance to choose a deal that makes the most sense for you. It is the implementation of a complete winning strategy, not just finding a “buyer”, that has produced over 140 (effective November 1, 2007 with the Maine Limousine transaction) successfully sold chauffeured transportation businesses.
2. Can you describe your experience with selling chauffeured transportation companies like mine?
I have the utmost respect for many general business brokers, many of whom I have developed friendships with, and for their professional talents. Likewise, they appreciate the specialized expertise of CTA and call on it regularly to co-broker deals. You may also have a close personal relationship with a local business broker. That may be why you are considering hiring him/her to facilitate the sale of your business. Before you commit to hiring any local broker, I urge you to keep this in mind.
Case Study: In 2005 a limousine business in Connecticut listed with a local broker in Fairfield County . The broker, Dick, now a friend of CTA, could not find a buyer. Dick called CTA on the recommendation of the Seller. CTA found a buyer in Albany , New York and the deal was completed within 90 days. The transaction required CTA to find the Buyer and CTA to justify the deal to the Buyer and the Lender.
As I mentioned, it is very common for local brokers to overestimate their ability to deliver results in our industry. Many times it is not their fault. General brokerage rules of thumb often do not apply to chauffeured transportation. That being said, request as much detail about the local broker's track record, strictly within the chauffeured transportation industry. Ask about problems with deals that he faced and overcame. Ask about the challenges of securing financing in our industry in particular.
Only you can determine what level of business brokerage experience is enough to satisfy you and your business needs. An average transaction with CTA takes typically 3-9 months.
A significant number of CTA listings are listings that were originally placed with non industry specific brokers. This listing is usually, a year to a year and a half, after the Seller made a decision to sell the company, losing a year or two in the process.
3. I understand CTA and many other premium brokers require a commitment/launch fee to list a business. Do you? If not, why?
CTA is not in the business of stockpiling listings. We are in the business of selling chauffeured transportation businesses, and we are serious about producing results. We have a formula for success that has produced over 140 sold businesses. Before CTA lists a business, it must meet the following criteria:
a. The seller understands the current market value for his business and is willing to take a reasonable price to market.
The seller is properly motivated to sell.
The seller understands CTA fees and agrees to follow CTA's process for success.
If the seller meets these criteria, much like retaining the services of a high-powered accountant or attorney, he secures CTA's broker services through a commitment fee. But the commitment fee not only secures CTA talent, time, and resources, it is also the fuel for launching a marketing process that has produced over 140 completed chauffeured transportation business sales.
Our clients have found that following CTA's proven method for success is more than worth the up-front investment to secure the maximum marketing reach for their business and to secure CTA on their side of the negotiating table.**
**Example: In a CTA listing sold in 2007, CTA sold the business for $75,000 more than the Seller's anticipated price. What a wonderful Surprise! In the Real Estate Sales Industry, Sellers listing with ‘industry specific professionals', net more money than with ‘non industry specific' brokers. It just makes good financial sense to get the very best.
4.What are you doing to assure me that you are equipped with the continued education and professional training to successfully take my business to market?
To insure that all our professionals at CTA are up to date on the latest in valuation techniques, selling and marketing strategies, broker law, ethics, negotiation skills, memberships are maintained in the IBBA (International Business Brokers Association) and TABB (Texas Association of Business Brokers). These two broker associations provide training, support and resources to insure that, you the Seller have a broker well trained and current in all the skills necessary for a successful selling process.
