How are people finding brokers?

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March 06, 2024

by a professional from University of Tulsa in Denver, CO, USA

I see so many businesses listed with unscrupulous brokers (and some listed with really grade A brokers). How do you think people find their brokers and why do they do such a small amount of research/shopping around?


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Reply by an intermediary
from Harvard University in San Diego, CA, USA
Most business owners just call the first broker that comes up on a google search and decide to move forward. Most brokers sound really knowledgeable in a 30 minute call especially because most business owners have never learned about business valuation or selling a business. I would love it if more listings sites had broker rating systems to rate the quality of information, the responsiveness and the overall process.
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Reply by a searcher
from Bowling Green State University in Surrey, BC, Canada
Might be different in the US, but up here generally 'brokers' pretty much self-segment into a few categories. There's the small business broker who tends to focus on 'Main Street' businesses like retail, F&B, home services, etc. Typically, they will post listings right on their websites - occasionally they will land a lower mid-market business.

Then, there's the folks who seek out and focus on the lower mid-market. For the types of deals Searchers are looking for, these are good folks to know. Generally, they do not post listing on their website instead engaging in a networked process. These deals tend to be too small for PE, but could be a fit for a strategic. These brokers tend to use their networks to market deals directly, so it makes sense to get on their radar. And I have found these folks do their best to help prepare the seller for the process, setting expectations, guiding, etc.
The key for a Searcher is to come off as credible. They want to ensure they are only bringing qualified buyers into the network. In Canada, a great way to connect with these folks is through networking events like the Business Transitions Forum, Association for Corporate Growth, etc. - maybe you have similar concepts in your area.

Beyond the lower mid-market, we're into the corporate finance shops of the Big 4+ accounting firms. Their first calls are to PE and targeted strategics. Deal sizes skew larger (though that could change) and the folks have much less time for Searchers due to the perceived 'closing risk' associated with the loose confederacy of funders backing the deal and relative inexperience of the Searchers.

Hope this helps.
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