At Platform we have experience working with brokers and without them. We have seen good ones add value for their client and we have seen them be of no value at all - and in some cases even seen them be a hindrance to a transaction.
Broker fees can range from 10% of the selling price to upwards of 20% of the selling price. By any measure that is a steep price to pay out when selling your firm, so it is important to consider whether you are getting at least that much in additional value from using a broker. So let’s talk about what value a broker does and does not provide.
First it is important to recognize that there is little a broker can do to substantially increase the purchase price paid for your firm. The market for independent firms is very well established in most regions and thus the price range paid for independent CPAs is more or less set. A good broker recognizes this and seeks to provide value in a handful of other ways:
- Manage administrative duties: As the owner of the firm, you are integral to the day to day operations and occasionally can’t afford to spend your time managing the administrative side of a broad selling process. A good broker will handle things like: marketing the sell, buyer inquires, non-disclosure agreements, scheduling meetings and calls etc. so you can keep your practice going during the selling time frame
- Source and screen buyers: A good broker will have existing relationships they can shop your firm to and will also market your practice to attract new ones. Additionally they will screen buyers to ensure they are serious candidates to purchase. Meaning they will only bring you parties that have real intent to buy and who have the financial resources to get a deal done
- Serve as a moderator: As previously mentioned the price is often not the most negotiated part of a transaction. Often negotiations center on other important points such as down payment, seller note interest rates, non-compete terms etc. Given the often competing interest of both parties in these discussions it can be helpful to have a moderator ensure that the negotiations are fast and friendly. Aside from helping get a deal to the finish line, moderation can be helpful in keeping relationships in tact in the even that a principle is staying on board through a transition period.
With all that said, at Platform our aim is to be your first call when considering selling your practice, and we are interested in your practice whether you have already engaged a broker, or not. We can very quickly determine whether your firm is a good fit for us and likewise can give you the information necessary to determine whether we are a good fit for you. If there is a match, not only do you avoid heavy broker fees, but you close a deal quickly that has immediate payout and favorable transition terms for you.
For more thoughts around selling your firm check out our other posts in our series Valuing and Selling Your CPA firm.