I’ve recently made it a point to try to have at least two in-person business meetings every month. Believe it or not, I’m not just doing this for the free lunch. I’ve learned that these are the meetings that actually lead to good working relationships. The hit-rate of one of my typical 15 minute meet-and-greet Teams calls is about 5x lower compared to when I sit down with someone. Once you take away all the paperwork and projections in an M&A deal, you’re left with two people shaking hands over a business. If you have ever watched a seller chase the wrong person for months, only to walk away empty-handed, you’ll understand what I’m saying. I got the chance to talk about this idea with Omar García, managing partner of VR Business Brokers in San Antonio. He has been selling businesses since 2008, well before ETA was a trend, and he has developed a simple system that more brokers should copy in order to find the right buyer for the business. A lot of brokers will just fire off a CIM to anyone who signs an NDA. Omar says that this wastes time for everyone, and more importantly, it puts the seller at risk. Over time, he’s developed some filters to find the right buyer. When a buyer inquires, Omar will automatically send out an NDA. After it’s signed, Omar won’t do anything else until the potential buyer books a short call with him. Half of the people who sign never do it, and that tells him everything he needs to know. According to Omar, if the buyer can’t take fifteen minutes to talk about the business, then they’re not serious about buying it. For some deals, Omar and his team will implement a second check. They’ll ask for proof that a buyer can cover the down payment before they send any information over. It might sound strict, but it serves to protect the seller’s information. While these checks might bother a few potential buyers, Omar would rather have them be disappointed than potentially expose his client’s confidential information. These filters do come with some cost. When a listing is hot, he might have to run eight calls in a row to meet every potential buyer. The time constraint can be challenging, but it ultimately improves the quality of the buyers he works with, which then improves the quality of the outcomes. The New Wave of Buyers Omar has had to set up these filters because of the new wave of unqualified buyers. I’ve written about this phenomenon before in this newsletter. When Omar started in 2008, the dream job for a young professional was consulting or maybe climbing the corporate ladder inside a major company. Now, it seems like the dream is ownership. He regularly sees recent Ivy League grads looking for mom-and-pop businesses. Many of them are in their first acquisition process and treat the search as if they were building a portfolio. When he hears things like “I have looked at 120 companies,” Omar takes it as a sign that the buyer is likely just window shopping. While this shift likely began before COVID, it accelerated quickly after it. The market was suddenly filled with self-funded searchers as opposed to the traditional approach. As a result, brokers no longer deal with just a handful of seasoned operators making inquiries. This is what has made Omar use his “handshake” filtering technique to sift out the unserious prospects. The rise in interest has also made it easier for business owners to sell. If a company produces more than half a million in cash flow and is not dependent on the owner, Omar expects it to sell. The demand is there, no doubt. The challenge is finding the right buyer. The Human Side of Selection Near the end of our conversation, Omar mentioned one of his partners, John Small. John joined the firm at 66 years old. He is now 83 and still meeting clients in person, making it a point to shake their hands. And of course, he is still closing. A couple of years ago, he showed up to meetings with a walker because of some back issues. That didn’t stop him from making connections with people. He ended up finishing as the top broker in the entire VR system that year. I swear I didn’t write this whole article to justify my dining habits. The old-school meeting really works. As more buyers hit the market and more baby boomer businesses go up for sale, you’ll quickly learn just how far a firm handshake can really take you in life. Conclusion You know the spiel. If you want a quality of earnings report, check out my website. So to mix things up, I’ll tell you what I want. I want to make a connection, so feel free to set up some time with me to discuss how we can work together. I’ll take either that or free lunch if you’re in the area.