Providing Startup Financing Solutions Since 2001

Who Does the Broker Represent in a Sale?

A common mistake that buyers make is to assume that a business broker either represents their interests or is neutral at the very least.The truth is that if you contact a broker about one of his listings, he represents the best interests of the seller. Indeed he is legally obligated to do so.Keep this in mind when dealing with brokers and keep your cards close to your chest. Anything you reveal about your weaknesses as a buyer will be used to screen you out as a serious candidate.

The reason why sellers engage brokers for a 10 to 12% commission fee is so that they can be left to manage the business while the broker engages in the time intensive task of weeding out the serious buyers from the not-so-serious.For every serious buyer there are 99 window-shoppers. Owners need to focus on ensuring that the company’s numbers are not deteriorating during the sales process.Deteriorating numbers lead to lower valuations and a lower selling price. By working as a team, the owner and broker can maximize the final selling price and terms.

Always approach buying a business as you would a high stakes poker game. It’s precisely that for buyer, seller, and broker.

Leave a Reply

Your email address will not be published. Required fields are marked *