Is it ever a good idea to go around a broker?

searcher profile

January 15, 2021

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

A broker reached out to me with a deal that we have significant interest in (in an industry that we have already been spending time looking into). I spoke to the broker a couple of weeks ago, explained who were, our financing and why it might be a good fit and they agreed.

It also appears that the broker hasn't really spent any time on this company yet and they are very early in the process (no real timeline to speak of). Naturally, our thought was "let's move quick and try and preempt any process." We reached back out to the broker with a few questions and explained that if we could get a couple of answers (or even better a prelim call with the CEO), we'd be able to make an offer relatively quickly. No response. One or two more emails in, no response.

What we are wondering now is whether or not it's a good idea to reach out to the CEO of the company directly? Importantly, we aren't trying to cut out the broker, etc. just want to move quickly. Any thoughts?

0
1
87
Replies
1
commentor profile
Reply by a searcher
from Harvard University in Fort Wayne, IN, USA
I had a situation where the broker was misinforming his client and being an all around bad actor. The seller and I had developed a very good relationship (and had a direct line of communication). I felt compelled to let the seller know some of the information his broker was sharing was simply wrong, and it was likely why he continued to not be able to close a deal (I was the 3rd buyer to get close in three years). Long story short, the broker found out and spent the next several weeks telling the seller what a bad buyer I would be, and then broker let me know the seller wouldn't like to speak with me anymore. I reached out directly several times with no response.

The business still hasn't sold (it's been over a year), so I may have been right about the broker, but the reality is that the broker (if s/he's got the contract) will have far more time w/ the seller than you. So most of the time, what the broker thinks of you, the seller will eventually think of you. The one exception may be if the broker continues not to respond to you, that forces your hand, but otherwise, keep the broker in the middle, happy, and convinced you're the right buyer for the seller AND the broker.

This is also why I spend 95% of my time on propriety deals and avoid brokered deals unless they are the perfect fit...
Join the discussion