Many people get exposure to buying a business on shows like shark tank which show investors making a decision in a few minutes. The reality is that buying a business is a process that unfolds over time. Business Brokers can assist potential buyers in this process.
We’ll discuss how you can establish good relationships with business brokers that will assist you in a successful purchase of a business. We will also cover some of the misconceptions that potential buyers have about working with Business Brokers to buy a business.
Working with a Business Broker is different than working with a real estate broker
Since most people are familiar with real estate brokers, some people that contact Business Brokers to buy a business think it’s like using a real estate broker to buy real estate. There are some similarities but it is also very different. First of all the sale of a business is confidential so before a Business Broker can provide details about the business a buyer needs to sign a confidentiality agreement.
Also, many Real Estate Brokers represent buyers. A Real Estate Broker will do searches in multiple listing databases (MLS) for a potential buyer to show the buyer properties that he might be interested in. Most of these properties are listed by other Brokers. People that are interested in buying a business should understand that this is different than the way Business Brokers operate.
Most Business Brokers represent sellers
Because Business Brokers typically represent sellers they focus on selling their own listings. Since the sale of a business is confidential there are no multiple listing services where Business Brokers share the details on other Brokers listings. There are databases like bizbuysell.com which have multiple listings but these typically operate where each broker focuses on working directly with buyers for their own listings.
So motivated potential buyers should look on these websites to see which listings are of interest and contact the brokers that have a listing that is of interest or even better, fill out the online NDA for that listing so the broker has that in place already.
We often get contacted by potential buyers that want us to search for a particular type of business. If we have that type of business available then we will present it to the potential buyer but we don’t do external searches for a business. And most business brokers don’t. What we will do is keep the potential buyer’s information and contact him via email when we have new listings that might be of interest.
There are a limited number of business brokers that represent buyers and if you are interested in finding one you can do research on buyer business brokers. One of the ones that we have worked with that represents buyers is Gottesman Company. They do buyer searches for mid-market businesses with annual revenues of $5 Million to $500 Million. There aren’t many buyer brokers for smaller businesses.
Business Brokers are selective in which Buyers they work with
Another common misconception is that Business Brokers must work with every potential buyer that contacts them. This isn’t true. Our job in representing sellers is only to work with potential buyers that are qualified financially to purchase their business and are motivated to purchase in a timely fashion. Also, many sellers want us to look for a particular type of buyer so the buyers that we work with for these businesses must meet certain criteria of background and experience. So when someone fills out an online NDA and buyer information form we need to make sure they are the right buyer before we can release any information to them. Since we represent the seller we can only release information to buyers that meet their criteria.
In addition, most sellers want us to select buyers that are easy to work with so we need to rule out buyers that are too difficult and abrasive to work with. The sellers typically want someone that is friendly and will be able to work well with their staff and customers.
Now from all this don’t get the idea that we don’t like working with potential buyers. We do. Once we have a solid buyer that is qualified, a pleasure to work with, and motivated to move forward quickly then we’ll work with them to find the best business that fits their criteria and financial capabilities.
Establishing a good relationship with Business Brokers
The best way to establish a good relationship with us or any other broker is to do your homework. View our Businesses for sale. Think about what types of businesses you are interested in and whether your background and skills are a good fit to acquire a particular business and run it. Then fill out our online NDA for one or more businesses that you might be interested in and please provide us with the details on your financial information and background. Then a business broker can provide you with details on businesses that you are qualified for and interested in.
In terms of financial qualifications some sellers are fine with people that have 10% to 20% of the purchase price as a down payment for Bank Financing and others want someone that has the funds available for the full purchase price for a faster sale without bank financing so the amount of money necessary to purchase a business varies depending upon the particular business and owner requirements.
Reviewing the details on a Business for Sale
Once you have reviewed the confidential information on a business, then its time to contact the business broker if you are interested in pursuing one or more of the businesses that you have reviewed. The business broker will go over some of the details and questions that you might have and see if it’s appropriate to set up a meeting or phone call with the seller. After any initial questions are answered from the seller we look for potential buyers that are going to make a decision on whether or not they will make an offer for the business. If so we can help with a draft of an offer letter and negotiating the terms between buyer and seller.
Keep in mind that we always have multiple potential buyers so buyers that have a good relationship with the seller and us and can move forward quickly with a good offer and have the funds in place have an advantage. This increases your chances of closing on business and getting business brokers and sellers to spend time with you versus the many other potential buyers that are out there contacting business brokers.
Please keep in mind that although we try to get back to qualified buyers promptly we work with thousands of potential buyers so please be patient if we aren’t able to respond to you right away. We hope that this information helps you in making the best use of your time and our time in working with Synergy Business Brokers.
Businesses for sale
We have organized our Businesses for sale to help you to narrow down which of our businesses for sale might be of interest to you. Please click on the category of interest below to see our businesses for sale within these categories. When you find a Business for sale that is of interest, please fill out our online NDA on the listing of interest and provide us with some information on your qualifications and background.
For more on us, you can view Deals that we have closed, Our Team, Buyer Articles, Buyer FAQ and Reviews that we have received from Buyers and Sellers.