Buying a business is a daunting task, and just like you probably wouldn’t go to court without a lawyer or buy a house without a real estate agent – a smart business buyer needs a good business broker to help them navigate the business buying process.
What makes a good broker a good broker? There are a few major things.
A good broker won’t just send you NDAs to sign.
When you first contact a broker or first inquire about a particular business, you shouldn’t immediately get a seemingly automatic reply with the NDA (non-disclosure agreement) to sign. If you are able to gain access to confidential business information about a business that is for sale without a broker asking you anything about yourself – that broker is not going their job. One of the most important functions that a business broker serves is to keep the confidentiality of businesses that are for sale. A breech in confidentiality can be disastrous for a business, and a big part of maintaining confidentiality is determining if the buyers who are inquiring about this business are even buyers at all. You might be a competitor trying to find out if you can steal the best sales staff by telling them their employer is selling and they will soon be out of a job. You might be someone who can’t possibly afford to buy this business and therefore have no reason to gain access to confidential information. You might be an employee who is trying to find out what your owner is up to so you can warn your fellow employees about the for-sale status of the place you work.
The point here is that it can be a bit frustrating as a buyer when you aren’t able to get the information you need immediately. It can seem intrusive that a broker wants to have a conversation with you about your finances and your work experience – but these practices are what you want to see. This diligence where confidentiality is concerned is what separates a good broker from the bad.
A good broker isn’t always available.
A good broker is busy. They are meeting with sellers, they are assembling comprehensive marketing packages for buyers, they are taking pictures and shooting videos, they are having conversations with other buyers, they are working out commercial leases with landlords and property managers – the list goes on and on. Many new buyers get frustrated when a call (or three calls in five minutes) goes unanswered. Understand that if your broker is good at their job they won’t always be available. You aren’t their only client – and you shouldn’t be.
A good broker will find the time to address your concerns, answer your questions and negotiate with the other parties on your behalf. Just realize that it might not always be an immediate response and that any delay means that your broker is doing their job – it doesn’t mean they are ignoring you.
Your business broker is only one part of the process.
Buying a business is a long and often very frustrating process. Why? There are many personalities and the inherently complicated nature of a small business to contend with. In a transaction there can be buyers, one or more sellers, the buyer’s broker, the seller’s broker, the buyer’s attorney, the seller’s attorney, the transaction attorney, one or more business accountants, the property owner, the property manager and maybe even a few key employees. If you’ve ever tried to get four people to agree on where they should go for dinner, you can guess that trying to get all of the parties involved in a business transaction to agree on a complicated purchase agreement can be a monumental task. Within that task your broker acts as a negotiator and as a buffer between all those involved. This means that when you ask for something from the other side, your broker’s hands are tied if the other side is dragging their feet or refusing to cooperate.
The point here is the most successful business buyers are also the most patient, and they also understand how complex their transaction can be.
Managing expectations is an important part of the successful purchase of a business – so find a broker who wants to have in depth conversations about your goals for business ownership, your experience and the capital you have available to invest. Look for someone who answers your calls and emails in a timely (although not immediate) fashion. Once you have a good broker understand that there are a great many things about a business transaction that they can’t control. Be patient and realistic, it’s the best way to set yourself up for the purchase of the right business for you.
Do you have more questions about the business buying process? Would you like to know what information we would ask from you before we send you the NDA and why we require that information? Please leave any questions or comments here and we would be happy to help.
12995 South Cleveland Avenue, Suite 249
Fort Myers, FL 33907