Feedback From A Business Buyer About A Business Broker

Ever wonder why over 70% of California small businesses never end up selling? There are many reasons why, however I got an email from a business buyer yesterday on BizBen who has had several frustrating experiences with business brokers and agents searching for businesses. The latest email I received from them illustrated a problem many business brokers and agents have with not collecting data upfront from business owners when they take a listing and writing up a detailed Profile (Listing Package) explaining about the business with detailed financial information pulled from the tax returns and financials of the business being sold.

There could be several problems with this situation: 1. The owner can't produce financials. 2. The owner is cheating by not declaring income/revenue. 3. The broker/agent just doesn't want to work with this particular buyer for whatever reason. 4. The broker/agent does things the "old fashion way" by not disclosing info without a Letter of Intent or Purchase Agreement.

Here is the email I received from the buyer:

"Dear Sir/Madam:

I need to know what step to take next. I am interested in purchasing the business listed as 8XXXX. However, I have spoken with the sales representative and she says you must make an offer before you can see any documents (such as sales, expense and tax data.) She also states that tax data will never be made available and gets very angry when you ask for such documents. She actually hung up on us when we asked.

Furthermore, we called her broker and he said it wasn't a problem---just go ahead and make an offer and then have a CPA say the deal isn't any good if you want to get out of your offer.

I can't believe this is the way this is supposed to work.

Please advise. Should I get a sales person from a different agency? Get a lawyer. Call the real estate commission? Thank you"

Hopefully more brokers, agents, and buyers (owners also?) start communicating better and  get that 70% of all small businesses never selling statistic become a thing of the past!

Any comments? Would love to hear them.

Posted on May 8, 2007  |   Email This Blog Post   |   Print This Blog Post