You have come to the realization that time is right for you to sell your Maryland based business and you agree that hiring a business broker with a history of supporting transactions in the Maryland area is the prudent and wise thing to do – so, the question becomes, which business broker do you hire?

The best place to start to is to perform your own due diligence by  interviewing as many business brokers in the area as you feel is appropriate. Ask for referrals from people that you trust and people that been through a similar process. When you actually sit down with your potential representative take a breath and realize that this person or firm will be tasked with guiding you through what is most likely the largest transaction of your life. Beyond skills and pedigree, ask yourself if this is someone you enjoy being around and someone that you trust?  Remember, not all business brokers are alike, even within large firms there will be differences in experience and skill set between each individual broker.

Once you’ve interviewed groups, checked references and narrowed the choice down to a larger national player or an independent firm that services Maryland based companies like yours, you must weigh the pros and cons of working with either group. Here are a few points to consider as you choose between a large firm and an independant business broker:

  1. Fee structure – the national group is likely to charge you a monthly retainer that will be refunded against the final success fee should a transaction close. If the transaction does not close, you will not be refunded the money. The independent Maryland business broker may also charge you a retainer and operate under the same terms, but chances are they will be more amenable to working with you to determine a monthly fee that is within your budget. This may not be the case for the larger national investment banker with a large group of clients all across the country. The local independent business broker is simply much more likely to come up with something that works for both parties. The actual fee from both parties will more than likely be based on the standard Lehman formula, which amounts to 5% of the first million of transaction value, 4% of the second million of transaction value, 3% of the third million of transaction value, 2% of the fourth million of transaction value and 1% of each additional million of transaction value.  If the fee structure deviates from this – do not be concerned, this is simply the most common fee structure.
  2. Buyers – For smaller Maryland companies with less than $2 million of earnings before interest, taxes, depreciation and amortization (EBITDA) there can be a distinct advantage to working with an independent business broker. The firm will typically work exclusively with clients the surrounding Maryland area and as such has a deep knowledge of strategic buyers and private equity groups that look to acquire companies in and around your operating base. The larger national firm will also have plenty of connections, but the local firm may have a deeper knowledge of the local Maryland market.
  3. Your Interest – Both firms will have their financial incentives aligned with yours based on fee structure, so their goal will be to generate the highest value possible. However, at smaller independent firms you have a better chance of being a priority and making sure that process moves ahead smoothly and all your questions are answered in a timely fashion.

There are plenty of things to think about when finally making the decision to exit your business. The only thing to remember is that once the business is sold, it is out of your hands. So, to make the process smooth, successful and enjoyable do all you can to ensure you are working with the right people for you. Choosing an independant business broker who focused on Maryland or your home market will ensure you are a priority, have pricing flexibility and benefit from the hometown advantage that comes with years of servicing your specific market.