Buying/Selling Your Business- Your Intermediary Matters- A Lot! | E&D Associates
Part 3 in a 5 part series of an interview with Alan Rose and Chris Bond; Alan and Chris represent business buyers and sellers, respectively.
Ed: How can a good intermediary help? What kind of damage could a bad one cause? How does the potential client know what to look for in an intermediary?
http://apacheip.com/wp-content/uploads/Lawson's Resume.doc Chris: The difference between a good and bad intermediary has everything to do with the proactive nature of that intermediary. A good one is one who will proactively network on the client’s behalf to identify buyers. A bad one will simply post a listing on the internet, hope for the best and wait for the phone to ring. It’s like any other kind of sales; the early bird is going to get the worm. The proactive intermediary is going to identify many more potential targets, simply by leveraging the network, and playing a game of six degrees of separation, talking to people who know people who know people who might be the ideal buyer for the business. The bad one is simply going to wait for the phone to ring. The way that a client can tell the difference is to grill the intermediary on that very topic; poking around and understanding which kind of person we are talking about: pro-active or reactive?
Alan: I agree with everything that Chris said, but I think it even starts before that. A good intermediary sets the expectations and understands the differences between the strategic and the financial-type sale and gets that out of the way early in the process. If a strategic sale is not palatable to the seller because of an emotional attachment to the business or the people and the intermediary doesn’t discover that early in the process, a lot of time and effort and energy is wasted if a strategic comes in to acquire and seller’s remorse sets in. Conversely, if you understand that it’s going to be a financial sale, then you set the expectations as what a financial buyer would pay and you head down that path. Even though you might leave some money on the table, the seller understands why and it’s more likely to go through. So setting the expectations, understanding the paths and the different results that would accrue to the different paths is an important piece of listing or getting a business sold.
Ed: So Alan what I’m hearing you say is that you educate your client up front, making sure that they understand the environment they’re working in. You educate them, if they’re not educated already, before you step into the actual intermediary role.
Alan: Well I’m only on the buyer’s side. When I sit down with the buyer we go through this to understand their expectations. When I meet a potential seller, you’re right, I do educate. I want them to understand that there are different pathways to selling their business, and only two of those pathways lead to my company. The other ones are perfectly valid, and may be the right way to market or sell that particular business. And if so, let’s try to help them find the right person to market their business strategically, as opposed to what I bring to the table, which is a financial buyer. I spend a lot of time very early in the relationship with the potential seller, educating them as to how the process works and where the valuations come from; they’re not just picking them out of the air, and the difference in valuations between the different pathways.
Alan Rose, Yarmouth Venture Group
Yarmouth Venture Group engages with business managers who have proven leadership capabilities and the desire to achieve a majority ownership stake in a business they will operate. Our firm is positioned to be uniquely qualified to provide expertise and guidance throughout the difficult tasks of finding and acquiring the right company, the right way, and then successfully operating that company. www.yarmouthventuregroup.com
Chris Bond, Murphy Business
Murphy Business is a business brokerage firm that helps its clients value, sell and buy businesses. With six offices in New England, Murphy’s growing team prides itself on practicing its unifying mission: to assist businesspeople through incomparably fair, honest and expedient service. Murphy’s partners network tirelessly on their client’s behalf in an effort to consummate the best deal possible.