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 third article in our series? The Other Side.
Sending requests for information to some brokers is like sending requests into a vortex of no return. It can take days, even weeks for some in our business to answer an email, send over a P&L – and that can be very frustrating both for us as brokers and also for our clients.
The same issue can come from many parts of the transaction. An attorney taking two weeks to amend a purchase contract, a CPA going over financial records for more than a month, even sellers going weeks and weeks without responding to requests for more information.
All of these unanswered requests can slow down and even kill a deal.
If your own broker is really good about responding to your calls and emails, but you still aren’t getting requested information – then the broker’s hands are probably tied. They can only pass on to you the information they receive, so try your best to be patient.
That is not to say you should wait for crazy amounts of time for information. If it’s just too long, ask your broker if the time has come to move on to another deal. Sometimes the mere threat of walking away can get information flowing, although you should let your broker decide when the time is best to play that card.
If your own advisors are part of the problem, do your best to hurry them along. Sellers should also do their part in ensuring requested information is provided in a timely fashion. It can sometimes seem like the requests are neverending – but it is important to remember that the buyer is about to spend a very large amount of money on your business. You would want lots of information and answers too.
The problem is not always on the seller side. Buyers can hold up the transaction just as easily. Many buyers go into due diligence, thereby pulling the business off the market, only to repeatedly request more and more time. If you are serious about making a decision on a business, it really shouldn’t take you any more than two weeks to go through the financial records and determine if the business fits with your goals. Holding a business off the market for extended periods of time, especially if you don’t end up closing, is incredibly unfair to the seller’s side. Extremely long due diligence can cause a seller to kill the deal simply because for every day you aren’t buying the business – someone else can’t either.
The business transaction process needs the cooperation of all parties in order to be successful, so you must do your part and also be fair to the other side. Demanding and impatient requests can derail a deal, as can dragging your feet. Listen to your broker when they tell you what reasonable time frames should be, and then stick to those suggestions.
Are you a seller who has questions about what buyers can and can’t ask for during due diligence? Are you a buyer who is frustrated by the amount of time it takes to get information on a business and want to know what can be done to speed up the process? Ask us! Please feel free to leave us a comment or question here.
Want to read part 1: The Bad Offer? Click here.
Want to read part 2: Confidentiality? Click here.
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