Buyside Bankers / Brokers

searcher profile

July 09, 2021

by a searcher from Stanford University - Graduate School of Business in New York, NY, USA

Has anyone ever engaged a banker (or broker) to source opportunities? Are there any firms that are reputable and good?

I know many on the site are actively searching and thus a banker wouldn't make sense. However, since we aren't a traditional search fund, working with a banker may make sense to supplement our strategy.

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commentor profile
Reply by an intermediary
from The University of Chicago in Chicago, IL, USA
1) Buy-side broker can be just a "finder" or also an "advisor". "Finder" services have none or small up-front cost to buyer, plus a success fee. "Advisor" services are more expensive b/c it is very inefficient from a broker perspective. If a buy-side deal falls apart, the broker-advisor has to start from scratch. Whereas, on a sell-side deal, if the deal falls apart, the broker salvages most of the work and goes to other buyers.
2) To my knowledge, SBA does not allow their funds to be used for buy-side services. SBA lenders can opine if I am wrong.
3) Buy-side broker fee is large relative to buyer equity. Say P = $3 M, 10% equity equals $300 k. Broker fee can be $150 k to $250 k (may be less, may be more). Regardless of the number, it is large relative to equity. Who funds that if SBA will not allow it?
4) There is an opportunity for brokers to develop a "numbers based" practice. using automation with low monthly fee and low success fee. Some buyers need that. I know of few "advisor" type brokers representing PE firms.
5) We have a buy-side "advisor" practice. We have a monthly fee plus a success fee. We are exclusive to the buyer, meaning both the buyer and us work to maximize deal flow. 1/2 the time the buyer has found the deal or has identifies few targets. Few times the buyer is about to sign the LOI, or has already signed the LOI. Majority of times, other broker is representing the seller. Our buyers are individuals or corporate buyers, not PE.
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Reply by an intermediary
from Western New England College in Fort Lauderdale, FL, USA
^redacted‌ thanks for the tag. When I had investor capital and bought deals for them, I pretty much did all the searching leg work myself via mailouts, scouring listings, etc. My relationships with brokers were really on an individual listing basis, not constant communication to avoid being sent a lot of deals that didn't fit my needs and maintain my efficiency. After my investor passed away, I've partnered with a broker I used in the past -- he wanted a buy-side presence with him to source deals for his buy-side clients. I know from my experience as an acquisitions guy, and the buy-side guys I source for now with the broker, that buy-side guys are certainly more open to partnering with a broker that has buy-side experience. It's more of "here's something that suits what you want to do and your parameters" versus dealing with a listing broker who tries to 'sell' you on why their listing is so great and going over the top to try to sell you non-stop. Just my 2 cents based on experience
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