M&A Dos & Don’ts from a Broker’s Perspective

Once a seller has decided to sell (or is thinking about selling) a business, the first questions revolve around the worth of the business being sold, who are the best buyers and how can those prospective buyers be contacted?

A CPA or attorney can assist potential sellers with brainstorming sessions and help find a reputable business broker with the right industry connections.

A broker should be familiar with the unique business value of pest control businesses and have the know-how regarding potential buyers valuations, terms, contingencies and recent transactions.

Once a decision has been made to engage a business broker, the seller should understand the relationship and how it works:

• The broker represents the client’s interest as an intermediary when speaking to potential buyers.
• Never engage a business broker without a written engagement letter signed by both parties.
• The engagement letter should specify how the broker gets compensated and what services are provided
• An attorney and CPA will still be an additional cost.
• Business brokers expect to receive a percentage/commission of the sale price (generally ranging from 3 to 10 percent).
• Some brokers charge a modest retainer (nonrefundable) in additionto the success commission.
• Business brokers will request a period of exclusivity.
• The seller should be sure the broker obtains a confidentiality agreement from all prospective buyers.
• It’s important for the seller to know if the broker is also being compensated by a buyer with a finder fee.

Dan Gordon is a CPA in New Jersey and owns an accounting firm that caters to PMPs throughout the U.S. He facilitates several peer groups that help PMPs increase growth, profitability and accountability in their firms. Visit www.pcobookkeepers.com for information about his firm, PCO Bookkeepers. Gordon can be reached at dan@pcobookkeepers.com.