Unlike a real estate agent who knows that the majority of prospective buyers will ultimately purchase a home and will therefore dedicate numerous hours to prospects showing them properties, in the business for sale world less than ten percent of the alleged buyers ever purchase a business.
That aside however, the single biggest complaint I get from prospective buyers who use our guides is the lack of attention, diligence, and oftentimes overall dismissive nature of many brokers. Don't get me wrong, there are good brokers in the industry, but there are a disproportionate number of incompetent ones – this is typical of any commission-based industry.
Nevertheless, the fact remains that a business broker may be involved in the deal and you have to know how to use them. In this post I'll talk about the scenario where a broker represents the seller. Note that in some states, brokers can act as a "dual agent" meaning they can represent both sides of the deal. Personally, I think it's absurd and encourage any buyer to opt out of that relationship. How can anyone truly represent opposite parties? It's ridiculous!
Anyhow, when a broker is representing the seller, it's important for a buyer to realize that they (the broker) are, at least initially, the gatekeeper to the deal. They may be over controlling and try to limit any access between the buyer and seller or make demands about how the process is going to work. While it can be frustrating, as a buyer, you have to play the game, at least in the early stages.
Brokers only have one asset; their time. They do not want to waste it with unqualified buyers, and they don't want to parade countless prospects in front of their client (the seller) and to not have any evolve into an offer. Keep this in mind. Ideally, you want to open a direct line of communication with the seller and that will often happen as the deal moves forward, but not in the early stages. Also, brokers are concerned about the parties circumventing them and putting their commission in jeopardy. While it does happen periodically, it's not the norm, but, it is a broker fear.
This article represents a fraction of what you’ll learn on this topic in the How To Buy A Good Business At A Great Price© series - the most widely used reference resource and strategy guide for buying a business. To learn more click here
Several years ago when I decided to expand our consulting business, I decided to get involved in the business brokerage industry. I have long believed that when you want to learn sContinue Reading >
ontinuing the discussion of professionals that are involved in the process of buying a business, today I want to focus upon business brokers. In the past, I have brought up the issContinue Reading >
I read an interesting article online last week regarding the use of a business broker when buying a business which I believe was very misleading. For any of you who have read any oContinue Reading >