Should I be wary of a broker who won’t show comparable sales?

BDC lists market multiples, derived from comparable transactions or public market data, among the methods a Chartered Business Valuator typically uses, so comparable sales are one way to explain a recommended asking price. If a broker will not show any, you do not know how the number was built. That is worth raising before you agree to an asking price. It does not by itself show that the broker is acting badly, and there may be an ordinary explanation.

Ask what stands behind the number

Ask the broker to put the basis for the price in writing. Useful questions: which sales are being compared, how recent they are, whether they are asking prices or closed prices, and how the broker adjusted for differences in size, location, staff and the owner’s role. A broker who cannot share another client’s details may still be able to describe the sales without naming the business. If the answer stays vague, treat the price as unverified.

Comparables are only one input

BDC says the final selling price can be affected by numerous factors, including market conditions, the buyer’s strategic interests, due diligence, availability of financing, your eagerness to sell and your involvement in the company after the sale. Two similar businesses can therefore sell on different terms. A comparable list that ignores those differences tells you little, so ask how the broker accounted for them. Our guide to choosing a business broker lists other questions to ask.

Get an independent check

BDC says a valuator’s report can help you evaluate buyers’ offers and strengthen your position in negotiating the price or terms, and describes a Chartered Business Valuator’s report as a credible baseline. An independent report gives you something to test a broker’s figure against. The Competition Bureau states that it is against the law under the Competition Act to advertise or market something in a way that is false or misleading. Whether that applies to something a broker told you is a question for a lawyer.