Share This Info:  

Going Behind A Brokers Back: How Does A Broker Protect Themself?

See All Discussions   •   See All Contributors   •   All New Discussions & Comments

Comments & Replies: 2     Views: 3033     Posted By: Joe Ranieri  Joe Ranieri - Restaurant Broker - Orange County Area

What are some ways a broker can prevent a buyer and seller from doing a deal behind their back and what to do about it if it happens? Joe Ranieri (Orange County Business Broker) discusses ways a business broker or agent can protect themselves from buyers and sellers trying to circumvent them.

Topics: Business Brokerage, Buying A Business, Selling A Business     Tags: business brokers, buying a business, escrow bulk sales, selling a business

What are some ways a broker can prevent a buyer and seller from doing a deal behind their back and what to do about it if it happens?

For most business brokers, it's something that has happened: finding out one of your sellers and perhaps one of your buyers have decided to the deal without you. The scenario is usually the same, both parties lower the agreed price a little, but not more than the amount the seller would owe the broker a commission. For a broker, who has invested many hours and resources in selling the business, it's frustrating to feel cheated out of an earned commission. Just like there are some dishonest brokers, there are also dishonest buyers and sellers, and I've learned that although there will always be people who try to cheat the system, there are some ways to deter it.

1. Take only listings that you can adequately service.

It's tempting to take as many listings as possible, because we all know the list/sell ratios in business brokerage, but if you take too many then it's impossible to service them all appropriately. I've found that the sellers/buyers who have tried to make a deal without me, even though there is a listing contract in place, are primarily the ones I took that were out of the area, and beyond my normal sales territory. If the listing is an hour and half away, I must ask myself, "do I really want to make a 3-hour round trip to get a modification of terms or some other contract signed?" Does taking a listing that I can't properly service really serve the buyer, seller, or myself correctly?

2. Subscribe to a service of escrow publications.

There are companies out there which will tell each week which businesses have opened an escrow or have posted with ABC. These companies are invaluable in monitoring what is going on in the market. I've found a few of my clients over the years who have opened an escrow amongst each other, thinking I wouldn't find out. If I do see that one of my clients has gone to escrow without me, I'll call the escrow company and put a claim into escrow for my commission. If the seller and buyer decide to sell it amongst themselves and don't go to escrow, then of course I have fewer opportunities of recourse.

3. Always keep a record of Non-disclosures with buyers.

Never, never be tempted to send a buyer out to one of your listings without having them sign an NDA. Some buyers will try to say, "I'm on the road and have no access to a computer, can you just give me the listing?Ē Keep a good record of who you send out to the business listings, and avoid giving out too many to one buyer at a time. Also, beware of buyers who want addresses on listings that arenít the same type, such as, "your laundromat, coffee shop, bar, liquor store, mail box, and pool hall." In my listing contract and on NDA, there is language which prevents the buyer and seller from doing a deal without me for 90-120 after the expiration of the listing contract, so keep good records!

4. Produce a list to the seller of all prospective buyers you have procured the buyer.

At the end of the listing contract, provide the seller with names, not numbers, but names of all the buyers you procured through your marketing efforts. This reminds them that you keep good records, and their commitment to your listing contract, which has expired, but may have terms that spells how to deal with buyers found during the length of the contract. I have seen brokers who have taken their clients to small claims court for an earned commission, but even if you do get a judgement, it's still on you to collect, so possibly see an attorney for advice.

5. If it happens to you, don't let it get you down.

If you do get cheated out of your commission, deal with it in the way you think is best, but donít allow it to consume you or affect the way you deal with future clients. Most my clients are trustworthy, and so I don't let a few of the bad ones, make me a jaded person. Trust in our business is very important.

Contributor: Broker/Consultant: Elderly Care Services

Thank you Joe for bringing this topic of discussion. All of us Veteran Agents I am sure have many stories to share on this topic, good and bad.

We all need to remind ourselves over and over that Business Brokerage, like many other sales jobs is a relationship based business. No matter how many contracts and agreements we have in place, if trust, respect and honor are not in place people will unfortunately go outside the set boundaries.

So how does a Business Broker protect themselves from an unscrupulous Buyer or Seller?

1. Educate the Buyer and Seller as to what is expected of one another and what we can and can not do.
2. Work your butt off to create loyal fans for life.
3. Treat everyone with respect and in turn ask for respect back.
4. Cut ties with "challenging" Buyers and Sellers as quickly as possible with great respect.

And, remember to have fun.

  Helpful Resources To Assist In Selling And Buying California Businesses
Helen Yoo: Escrow & Bulk Sale Services - Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses

Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.

Diane Boudreau-Tschetter: Escrow And Bulk Sale Services

California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.

Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services

Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.

Steve Zimmerman: Restaurant Broker Specialist

Steve founded Restaurant Realty in 1996. He has personally sold/leased over 900 restaurants, bars & clubs, & completed over 3000 valuations. The author of "Restaurant Dealmaker - An Insider's Trade Secrets For Buying a Restaurant, Bar or Club" available on Amazon. Reach Steve direct at 415-945-9701.

Rick Carlson, Business Broker - Southern California

You Will Never Feel Lost In The Shuffle. Many Brokers Simply Send Out An NDA And That's The End Of Communication. All Buyers Receive A Personal Meeting With An Ace Acquisition Specialist So They Can Recommend The Perfect Business For You. Phone Rick direct at 800-985-4939.

Larry Larsen, Broker, Laundry Specialist - Orange, LA Counties

Larry Larsen, Realtor has over thirty years of experience in the sales, ownership, management, and construction of coin laundries. He is a licensed broker active in the sale of coin laundries, a licensed insurance agent specializing in coin laundry insurance. Phone Larry at 714-630-9274.

Michael Davidson, Business Broker - Southern California

Los Angeles Business Broker providing M&A quality services for Small Business Owners. We leverage our technology and expertise to Simplify & Expedite the Business Sales Process. Matching the right buyer with the right business is how we define success.

  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews
Due Diligence Checklist: 10 Key Items To Investigate When Buying Businesses

Buying a California small business involves reviewing due diligence checklists so buyers can learn enough to determine whether to proceed with a deal. Here's a due diligence checklist. Peter Siegel, MBA (BizBen ProBuy Advisor & Business Purchase Financing Expert) at 866-270-6278 shares his views.

Business Purchase Financing Expert Gives Tips On Proving Cash Flow

What are the actual "provable" adjusted net earnings (cash flow) of a small to mid-sized business being purchased? Buyers need to look carefully at all financial info for the "real" adjusted net income or cash flow. Peter Siegel, MBA (business purchase financing expert) at 866-270-6278 explains.

Who Really Represents The Business Buyer In A Deal? Does Dual Agency Work?

Who really represents the buyer? The selling broker or agent through dual agency? Many brokers and agents weigh in on this Discussion on BizBen. Bottom line is all business buyers need to know who really represents them and has their best interest at heart when seeking and negotiating on deals.

Attorney Specialist Shares Escrow Instruction Tips When Buying A Business

Once you have successfully negotiated the Asset Purchase Agreement ("APA") for your acquisition it's natural to relax a little and let your guard down. Attorney Specialist Mark Chatow discusses what business buyers should look out for when opening escrow and getting escrow instruction in place.

Due Diligence Issues: What Business Buyers Should Know About The Process

Willard Michlin, CPA, CFE at 800-864-0420 elaborates why you can do a large portion of the due diligence yourself, depending on your background, but you should never try to do it solely on your own. In this BizBen blog post he explores ways business business buyers get themselves into trouble.

What Are The Pros And Cons Of Selling A Business For Sale By Owner?

What are the Pros & Cons of selling a business yourself? Joe Ranieri (Orange County Business Broker at 714-292-5448) discusses all the angles of business owners taking the initiative and selling their own business. He covers: commissions, flexibility factors, control, exposure, and confidentiality.

Deposits With Business Purchase Agreements: How Much? Structure? Refundable?

Purchase agreements when buying or selling a small business can be tricky. A top Southern CA Business Broker discusses this topic including multiple strategies regarding deposits with business purchase agreements. Lee Petsas (Orange County Business Broker) at 714-363-044 contributes this blog post

What Steps Do I Take When Closing A Business That Doesn't Sell And I Close?

Every business broker knows that a listing taken is not a listing sold, in fact the ratio of listed vs. sold could be discouraging if you really thought about it. Joe Ranieri (Orange County Business Broker) discusses what you should do if you finally have to close the doors and call it quits.

See All News, Tips And Events

Escrow Services From Helen Yoo New Century Escrow
Southern California Legal Services For Buyers And Sellers
Willard Michlin Due Diligence Services
Bob Hughes Business Broker Riverside County San Diego
Google Plus You Tube
Vlogs and Podcasts

Auto Related
Business Services
Children Related
Communication Related
Computer, Internet Related
Construction Related
Entertainment Related
Financial Services
Health, Beauty Related
Home Improvement Related
Maintenance Related
Manufacturing Related
Media, Publishing Related
Pet Related
Photography/Video Related
Real Estate Services
Restaurant, Food Related
Retail Related
Service Related
Sports Related
Transportation Related
Travel Related
Wholesale Related

Auto Body Shops
Auto Repair Shops
Bars, Sports Bars
Cafe Restaurants
Car Washes
Cleaning Services
Clothing, Apparel Stores
Coffee Shops
Convenience Stores
Deli Restaurants
Discount, Dollar Stores
Dry Cleaners
eCommerce Websites
Fast Food Restaurants
Florists, Flower Shops
Full Service Restaurants
Gas Stations
Gift Shops
Gyms, Fitness Facilities
Home Health Agencies
Ice Cream Shops
Juice, Smoothie Shops
Liquor Stores
Markets, Marts
Pizza Restaurants
Postal, Shipping Stores
Preschools, Day Care
Print Shops
Salons, Beauty Shops
Sandwich Shops
Smog Test Only Shops
Smoke Shops
Spas, Med Spas
Sushi Restaurants
Tire Shops
Towing Services
Vending Routes
Wireless, Cellular Shops
Yogurt Shops

Contra Costa
Del Norte
El Dorado
Los Angeles
San Benito
San Bernardino
San Diego
San Francisco
San Joaquin
San Luis Obis
San Mateo
Santa Barbara
Santa Clara
Santa Cruz

0 to $99,999
$100,000 to $249,999
$250,000 to $499,999
$500,000 to $999,999
$1 million to $2 million
over $2 million

BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2018, All Rights Reserved

               Vlogs and Podcasts  
Join Us On Social Media - Content Updated Daily
Sign Up Today - For Our FREE BizBen Weekly Email Newsletter
Includes The Best Info On Buying, Selling, Valuing, Financing California Businesses:
Articles, Blog Posts, Podcasts, Videos/Vlogs, Discussions, Q&A, Workshops, Webinars,
Resources. Watch For An Email Confirmation After Signing Up Above. Thank you.
Clost Login

Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.

First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*

You Are A:

Email Address:

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
What Steps Do I Take When Closing A Business That Doesn't Sell And I Clo...
Read More News
Attorney Specialist Shares Escrow Instruction Tips When Buying A Busines...
Read More News