If you are a buyer trying to find the right business to buy, it can be tough to do due to the confidential nature of business resales. After searching through the websites until they all seem to look the same, and filling out your fourth or fifth non-disclosure you are questioning the entire process and wondering if you will ever find that right business.
Before I discuss working with Business Brokers in the next paragraph, I will tell you there are a lot of great Business Brokers out there that can play a pivotal role in helping you find and purchase the right business. You just have to find the right one. My recommendation is to find someone that has fulfilled all the requirements to become a Certified Business Intermediary (CBI) through the International Business Brokers Association, or a Certified Business Broker (CBI) through the California Association of Business Brokers. These individuals have committed themselves to a level of training, education and ethics that set them apart in the industry and will work hard to help you accomplish your goals.
Now on to why I feel your pain! I have a buyer looking at a brew pub listing for $800,000 that she is interested in. She came to me asking me to represent her in her pursuit of this business as it is listed by another broker. I provided the Listing Broker with non-disclosure forms from both the buyer and myself and buyer information on my client, and requested information on this business. What I got back from the broker were P&L statements only thru March of last year and P&L statements from 2006 and 2007, and nothing at all from 2008. They did not have a Confidential Business Review, Seller’s Disclosure or even a recasting of the financials. All there was from this broker was a request that my client make an offer!
From my vantage point, I cannot begin to advise my client due to lack of information. Since I’m a Business Broker, I at least know what to ask for, how to analyze it and what a proper value would be for this business IF I had the right information. I can only imagine what it must be like for a first time buyer, or someone that doesn’t deal in the business resale world everyday to figure out what their next step should be, or how to determine if the business might be a good fit without having the proper information.
This is many times why Business Brokers won’t work with other Business Brokers. Some are better than others. If the business is not packaged properly in the first place, it makes it impossible for a buyer (or another Business Broker!) to figure out whether the business is worth pursuing.
Here is my recommendation to buyers. If you cannot get enough information from a broker to analyze a business opportunity, or if the listing broker is pressuring you to make an offer without even providing you with a detailed write up on the business and the financial history, go get your own broker. There are plenty of great brokers, and again I would recommend one that is a Certified Business Intermediary (CBI) through the International Business Brokers Association, or a Certified Business Broker (CBI) through the California Association of Business Brokers. They can help you make wise decisions, or help prevent you from making bad ones! And collectively if you and your broker can’t get the information you need to make a safe well informed decision, walk away and find a business (and a broker) that will provide you with the information you need and will help you get to where you want to go.
About The Author: Greg Roquet, CBB, CBI is the Regional Director for Murphy Business and Financial Corporation of Northern California. Greg is a recognized expert in our profession and is a Certified Business Broker. Murphy has both franchise and agent opportunities available for those looking at Business Brokerage as a career. To discuss career opportunities in the business brokerage industry please give him a call. You can reach Greg at 530-753-1919 530-753-1919 or toll free 800-796-1140.
Posted on March 2, 2010 | 
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