Should You Use a Banker or Broker to Sell Your Business?

Issue #52

Welcome back to the Mid Market Insider!

Today, we’re answering the question of whether or not you should hire a banker or broker to help sell your business. And the things you should be thinking about when deciding.

When it comes time to sell your business, one of the first questions is often: “Should I hire a banker or broker?”

For many owners, the answer is yes. For some, it’s no. But for most, it’s probably the right call.

Before we get into it, let me be clear: I’m not here to tell you whether or not you need to use a banker or broker.

The point is this: there’s a right way and a wrong way to go about it.

A banker or broker won’t fool buyers. The best thing you can do is improve your business so their job is easier.

When I say I’ve been in your shoes, I mean it. I’ve started businesses. I’ve stepped in as president to run them. I’ve had weeks where I wasn’t sure how payroll was going to get met.

And when Four Pillars buys a company, we still have to raise the debt and equity to fund the deal. With a small team, sometimes that means hiring an investment bank, the very same type of firm many of you might hire to sell your business.

Here’s what that looks like:

Before taking us on as a client, the bank does some diligence. I usually go into those conversations confident about the deal.

But when the bank tells me they like it and don’t see any issues raising the capital, it gives me even more confidence.

I know that’s inefficient, I’m paying them, after all… but that validation feels good.

That’s what it feels like for a business owner talking to a banker or broker. You believe in your business, but you naturally have doubts about whether it will sell and at what price.

And here’s where it gets tricky. Brokers and bankers are trying to win your business, and they often do it by:

  1. Expressing more confidence than the competition that they can sell your business.

  2. Promising they can get you a higher price.

  3. Downplaying risks (like customer concentration) that buyers will care about, because it’s not their money or their reputation on the line.

So what do you hear?

“We can absolutely sell your business.”
“We can get you more than anyone else.”
“Don’t worry about those risks.”

Does that sound like a recipe for success?

Again, this isn’t an argument against hiring a banker or broker. For most sellers, it’s the right move.

But if you go that route, do it with the right mindset.

Improve the fundamentals of your business first, so you’re not relying on promises that won’t hold up when the buyer starts asking hard questions.

Reader Question of The Week

For context, this is a recent section I’ve decided to add. After receiving many questions in my day-to-day as the co-founder of Four Pillars, I wanted to share the most common ones in my newsletter in hopes that it’s valuable to you in some way.

If you have a question you want answered in a future newsletter, please reply directly to this email and I’ll do my best to answer it. Now, onto this week’s question:👇

Q: What’s the difference between “growing” a business and making it more “sellable”?

Growing a business will likely make it more sellable, but there still might be aspects of the business that are concerns for buyers.

The first one is customer concentration. There are many elements that must come together in order for a successful sale.

📺 What to Watch This Week

Watch one of our recent videos on YouTube…

Are QSR Franchises Good Investments? Burger King, Quiznos, Subway, In-N-Out...

Click the link below and check it out:

That’s all for today’s newsletter! Thanks for reading!

📅 Next Week:

Next week, I’ll be sharing why so many owners know they need systems but still avoid putting them in place.

It’s rarely about difficulty… It’s about comfort, habit, and the illusion that “what’s worked so far will keep working.”

Keep building,
Nick

P.S. 

If you want to discuss your business goals in greater detail, book a discovery call: