What are the value (and non value) propositions of using a business broker?

by a professional from Southern New Hampshire University

2 months ago

I'd value the feedback from the "Community" on this question.  Do Sellers and Buyers of businesses, and their 3rd Party Service Providers (Accountants/CPA's), Business Attorney's, SBA and Conventional Bankers, Business Advisors, etc...) feel that Business Brokers provide value, or inversely, does their involvement in the deal process, diminish the overall experience?  What do you feel are value propositions and misaligned value propositions of the Small Business Brokering profession?

Thank you kindly for your responses.

David.

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intermediary from Wesleyan University

Thanks ^Searchfunder member‌ for the tag. I'll add +1 to recognizing the value of this thread. ^Searchfunder member‌ makes an important distinction, though how these different types of intermediaries are understood by people varies. Regardless, an important aspect that bankers and M&A attorneys bring to the game (and many 'brokers' miss) is running a bespoke process for your business. That raises another element that should be mentioned, if you're hiring an intermediary make sure they are someone that is well suited to your situation. If they are then you'll get many times your cost back in value.

1 month ago | like reply | 0 likes

searcher from Stetson University

As a professional buyer with 15 years of experience working for PEGS, and as head of corporate acquisition teams, I've completed 25 acquisitions in 6 different countries. Later, as the owner of my own company, I made 3 additional investments, totaling 28 completed transactions over the last 20 years. I agree with Brett Muller. If you're selling a business, you should definitely engage an investment banker (IB). They are professional sellers. Business brokers, on the other hand, are essentially real estate agents who post the listing on the "MLS" and hope for the best. You might ask, "What if I am buying?" Sometimes, you will find deals that are already listed, which means you would use a broker by default. However, remember that the broker represents the seller, not you. A good accountant, a seasoned business banker (if you are using an SBA or traditional loan), or a small consulting firm (IB) can provide much more value to a deal that is already marketed. Remember, in this case, the broker has a statutory responsibility to the seller, not to you as the buyer.
The reality is simple. If you want to be a successful searcher, you need to actively search. Look for hidden gems and off-market deals. Get in front of people, talk to friends who know business owners, network at business groups, and connect with church groups. Each of these methods has helped me successfully close at least one off-market deal.

1 month ago | like reply | 2 likes

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