It’s part of the job, and it’s also a big part of why we get paid to do what we do. Business brokers act as buffers – in negotiations, during buyer and seller meetings and at the closing table.
The business transaction process has a lot of moving parts, and typically involves at least a handful of people and their advisors (like brokers, CPAs and attorneys). It can be very difficult, if not occasionally impossible, to get all parties to agree on a consensus and get a deal all the way through to closing. Avoiding miscommunication, maintaining confidentiality, putting out emotional “fires” when one side has offended the other – these are part of the day to day duties of a good broker.
The reality of the business buying and selling process is that some kind of issue during the course of your transaction is probably unavoidable. You could have the greatest broker in the world and your deal might still fall apart. If you are unfortunate enough to be stuck with a not-so-great broker, then the chances of a deal getting all the way to closing successfully are probably pretty slim.
So how can you tell if your broker is doing a good job or if what is happening is truly out of their control? Let’s look at the types of things that typically happen during the course of a transaction and what your broker can (and can’t) do about it. This first article in our series? The Bad Offer.
If you are trying to sell your business, there’s a chance that a buyer will come along and write an offer on your business that is so ridiculous your broker really wishes they didn’t have to tell you about it. They know the instant they tell you the offer, you’re going to be angry as hell.
“Are you joking?!? Has this buyer lost their mind?!? Why would you even bring me this?!?”
Well, we have to. Legally, we do. Any offer that is submitted to your broker must go to you, so the point here is don’t kill the messenger. Your broker has no desire to make you angry, as they are the ones in the transaction who have to deal with you.
Try to remember that even a garbage offer can be a starting point for negotiations, or at the very least can tell you whether a prospective buyer is serious about buying or not.
On the flip side, if you’re a buyer, your broker has to submit every offer you write – even the ones that they know are going to blow up in your face and prevent any future negotiation on a business you actually want. So listen when they tell you that an offer is a bad idea. They want you to get the right business, and that won’t happen if you leave a trail of angry sellers in your wake.
The bad offer is entirely dependent on the buyer in a transaction, so while a good broker might be giving the best advice, bad offers can and do happen. Remember that the business transaction process is just that – a process. Listen to the advice of your broker when receiving or writing an offer and you will have a far greater chance of success.
Are you a business seller who wants to know the best way to deal with a bad offer? Are you a buyer who wants to know what a decent offer looks like? Ask us! Please feel free to leave a comment or question and we will be happy to assist you throughout the transaction process.
Want to read part 2: Confidentiality? Click here.
Want to read part 3: The Other Side? Click here.
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