Business Brokerage Services in a Nutshell
We’ve been called ‘marriage brokers’ and in some senses, that is true.
Our job is to bring folks together to the point of a handshake on the commercial terms.
Then, just as a marriage broker passes their deal on to guys with starched collars or funny hats, our handshake needs to be blessed by the lawyers and accountants before any deal is finalized.
This dramatically drops the transaction costs for both parties.
What we do – The short version
- Maintain this knowledge base
- Coach sellers
- Coach buyers
- Business Valuations
- Prepare Marketing Plans
- Cold call buyers
- Record responses
- Revise marketing
All the above has to be in place before I can sit down with a buyer and seller and start to make a deal happen.
I’m a broker. The guy in the middle. Started in ’77 with Merrill Lynch in Calgary. Started on the private equity side back in 2003.
My area of expertise is bringing together the buyers and sellers of privately owned businesses.
It’s my job to bring the buyers and sellers together, explain to each what they can expect from me, each other, and the lawyers and accountants who will become involved as the deal progresses.
I give a layout of the time frames to expect, the pitfalls to avoid and sketch a map of where the lions may be hiding. I can tell stories of transactions that worked and of those that didn’t. I’ve experienced both as an broker and as a principal.
I’ll share my insights on why they ended as they did.
I can offer a rough idea of a fair valuation, but the final price is always a matter of negotiation between the buyer and seller. I am most often in dual agency, a high highfalutin’ term with specific legal implications to protect both the seller and the buyer. Everyone will have to sign a note that I explained this to you.
Private business transactions usually start with a business owner deciding to sell. This can be the result of other interests, health concerns, or simply feeling it’s time to retire.
My observation has been that most often it is a lifestyle decision rather than an action based on the business and it’s future prospects.
I will sit down with the seller to discuss the business. I’ll start to learn about his operations and pour over his financials. Once we’ve both agreed what we think the business is worth, I’ll start looking for buyers.
The buyer can come from my efforts or from the efforts of other business brokers. The big guys all work together sharing the commission.
There are lone wolves out there who don’t work with others. They are usually new to the business and seldom last all that long.
(There are horror stories of folks being asked to pay upfront for services like valuations or who get tied up with folks who demand exclusive listings. The need for an exclusive listing is to appease a broker’s banker. )
The same applies to retainers. There is no operational need for that when discussing firms less than seven figures.
It is sage advice to run in any circumstance you feel somebody is more worried about their banker than they are about you.
Banker’s have the biggest of clubs and the rest of us are no match for them.
I’m often asked how long it will take to sell a business.
There was one time that I received an accepted offer inside of 30 days. (Odd business. Crawled through ceiling ducts cleaning them. Buyer’s first comment was a grinning: ‘Guys get paid to do that?’)
Several times there was no interest at all even though the firm was correctly priced. Everything else was in between.
So a cardinal rule of operating a listed business is to operate it as though you’re still going to own it a year out.
When we find a buyer, one of the contributions I make in arriving at a deal is my list of past errors.
We strive to structure transactions that will minimize surprises.
For example, unless it’s addressed in the letter of intent, who will own the rent deposit with the landlord once the transaction closes? Really doesn’t matter as long as it’s known up front and accounted for beforehand.
But if it crops up during the close, then we have to re-open discussions to thrash it out. Best if we catch all these little details before the closing.
Most private business transactions contain conditional due diligence clauses. These are when the representations made by the seller are verified by the buyer. Usually this cannot happen before the offer because the transaction is taking place without the knowledge of employees, suppliers and customers. This is important so as not to introduce uncertainty in their relationship with the seller.
But many conditions are also conditional on a myriad of other items ranging from obtaining financing through to discussions with accountants or other advisers.
When it all comes together, we’ll share the dual excitement of a new owner and an ex-owner both about to embark on a new adventure.
Fees: None unless there is a completed transaction. We are absolutely success oriented. I only get to eat what I drag home.
But when a deal closes, I get 7 percent of the negotiated price before adjustments for current assets or debt. The details are set out here.