The Importance of Asking the Right Questions to Brokers When Buying a Business

Building strong relationships with business brokers is a crucial step in acquiring a small business. However, not all brokers are created equal—some specialize in specific industries, some overvalue their listings, and others may not be a good fit for your acquisition criteria. That’s why asking the right questions before working with a broker is essential.

At the same time, serious brokers will also ask you questions to determine whether you are a qualified buyer. Being prepared for these conversations ensures that you’re taken seriously and positioned for success.

Key Questions to Ask a Business Broker

When vetting brokers to add to my deal pipeline, I make sure to ask targeted questions to determine whether they are a good fit.

1️⃣ Do You Specialize in My Target Industry?

Not all brokers work with the type of businesses you’re looking for. If you’re focused on home service businesses like HVAC, pest control, plumbing, and car washes, you’ll want a broker who actively lists and sells businesses in those industries.

Follow-Up Question:
🔹 Can you share recent deals you’ve closed in my target industry?

2️⃣ How Do You Value Businesses?

A broker’s valuation approach directly impacts whether a deal is overpriced or reasonable. Some brokers overinflate business values to satisfy sellers, while others use sound valuation methods based on multiples of SDE (Seller’s Discretionary Earnings) or EBITDA.

Follow-Up Questions:
🔹 What’s the average multiple for businesses in my target industry?
🔹 Do you typically see seller financing included in deals?

3️⃣ How Many Businesses Do You Have Listed That Fit My Criteria?

If a broker doesn’t have active listings that match your financial and industry preferences, they may not be worth engaging with. You want brokers who are constantly sourcing businesses that align with your acquisition goals.

Follow-Up Question:
🔹 Do you work with sellers before they officially list their business for sale? (Some brokers help facilitate off-market deals.)

4️⃣ How Do You Vet Sellers Before Listing Their Business?

A good broker ensures that sellers are serious and realistic about selling. The best brokers conduct preliminary due diligence before listing a business, ensuring that financials are accurate and that the seller is truly committed to an exit.

Follow-Up Questions:
🔹 Do you require sellers to provide tax returns, financial statements, and proof of revenue before listing?
🔹 How do you handle unrealistic seller expectations about valuation?

5️⃣ What is Your Process for Introducing Buyers to Sellers?

Every broker has a different process for facilitating buyer-seller introductions. Some will want a signed NDA (Non-Disclosure Agreement) before sharing financials, while others require a detailed buyer profile before granting access to a business.

Follow-Up Questions:
🔹 What information do you typically require before allowing a buyer to speak with a seller?
🔹 How involved are you in negotiations between buyers and sellers?

6️⃣ What’s Your Fee Structure?

Most brokers get paid a commission from the seller when a business is sold. However, some brokers may charge additional fees, such as buyer engagement fees to access their listings.

Follow-Up Questions:
🔹 Do you charge buyers any fees to access listings?
🔹 How do you typically structure commissions with sellers?

7️⃣ Can You Provide References from Previous Buyers?

Good brokers will have a track record of successfully closing deals. If they can’t provide references or details on past transactions, that’s a red flag.

Questions Brokers Will Ask Buyers

Just as you’re qualifying brokers, brokers will qualify you to ensure you’re a serious buyer. Here’s what they’ll want to know:

1️⃣ What’s Your Acquisition Criteria?

Brokers will ask:
🔹 What type of business are you looking for?
🔹 What industries are you focused on?
🔹 What size of business are you looking to acquire?

How to Answer:
Be specific. If you’re looking for a home services business in San Diego with $250,000 - $750,000 in SDE, state that clearly. This ensures brokers send you relevant deals.

2️⃣ What’s Your Financial Situation?

Brokers want to know if you have the funds to close a deal. They may ask:
🔹 Are you planning to use SBA financing or private funding?
🔹 Do you have proof of funds or a pre-qualification letter from a lender?

How to Answer:
If you plan to use SBA financing, mention that you’re working with lenders and have the required equity injection (10-20%) ready. If using private funding, let them know you have investor backing.

3️⃣ Do You Have Experience Running a Business?

Many brokers prefer buyers with relevant experience because they’re more likely to succeed post-acquisition.

How to Answer:
Even if you haven’t owned a business before, highlight your professional experience, leadership skills, and financial expertise. If you have a background in finance, operations, or management, use that to demonstrate your ability to run a business.

4️⃣ How Soon Are You Looking to Buy?

Brokers want to prioritize buyers who are actively searching, not just exploring the idea of acquisition.

How to Answer:
Let them know you’re actively looking and ready to review deals. If you have a target timeline (e.g., within 6 months), mention that.

5️⃣ Have You Ever Been Through Due Diligence?

Since due diligence is a critical part of buying a business, brokers may ask if you’ve gone through this process before.

How to Answer:
If you haven’t been through due diligence, let them know that you’re working with a team of experienced professionals (accountants, attorneys, and QofE specialists) to ensure a thorough review when the time comes.

Final Thoughts: Asking the Right Questions Builds Trust & Credibility

Finding the right broker can make or break your business acquisition journey. By asking smart, strategic questions, you can quickly determine if a broker is worth working with while also positioning yourself as a qualified buyer.

📢 If you’re an acquisition entrepreneur looking to connect with brokers, lenders, or other professionals in the SMB space, let’s connect!

📩 Reach out via my website or LinkedIn to chat about deal flow and business acquisitions.