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Make Your Decision a Good One ...

Really like your article. I there's a gray area too of businesses buyer's that fall a little bit into both categories.

Whether your a financial buyer or a strategic buyer, the decision to buy a business very well could be the most important decision you ever make. 90% of people are discouraged trying to buy a small business. They are sick and tired of overpricing and losers masquerading as winners.

You MUST make sure you make the correct decision, this means buying the right business, at the right time, at the right price.

Most of the businesses out there for sale, are not advertised. Their only available on the hidden market.

Business buyers need to utilize the help available from the "Partner" On-Call Network ®. It's not only a sound financial decision, but also a sound strategic decision. That sounds like something that both the types of buyers you mention could get behind.

Come see us at, http://www.partneroncall.com

Give the most important decision you're going to make, the attention, detail and diligence it deserves!
It's not only a strategic decision but also a financial decision ...

Bravo to Ney Grant!

Bravo and thank you to Ney Grant. Business sellers, don't pay up-front for valuations. Pay for packaging, buyer search, and hard work in representing you. Beware of so-called M&A firms that talk of "unlocking hidden value", magical power of projections, overseas buyers, etc.

President of American Business Brokers ...

After having read the comments to "How to Become a Business Broker" I couldn't resist adding to the discussion. It is obvious that Mr. Radin & Mr. Bruce and Mr. Anderson are in the business of selling their products and services. Which is not a bad thing? If they didn't sell they would be out of business. However, Mr. Grant is pretty close to describing what it takes to become a business broker. Having been in the business and trained individuals for over 10 years and been involved in sale of over 460 businesses and personally owned over 35 different businesses I think it gives me the right to make a few comments.

First of all you do not need an MBA to be a business broker. Personally I have found that the guys that have come on board with us that had an MBA did not perform as well as the guys who did not. Why? Because to be a business brokers you need to be able to think on your feet and be people oriented and be a deal maker. Flexibility and creativity is much more important than an MBA or an extensive financial background. Personally, I think it is a hindrance, because it creates the same issues that attorneys have when trying to get deals consummated. By that I mean an attorney is an individual who had to go to college for six to eight years to learn how to find things that are wrong with a deal. Not what is right. I am not picking on attorneys only being a realist.

However, Mr. Grant is right on the money when he says that if you have been a past business owner you would be good at being a business broker. It is my belief and I cannot substantiate this, but ex-business owners do make the best business brokers. Why? Simple. They have walked in the other guys shoes. They generally know what it feels like for it to be Friday and have to hand out the pay checks knowing that there possibly isn?t going to be enough money in the account until Monday to cover the checks. They also know what it feels like to have their sales come catering down when they thought they had the orders tied up and they know what it feels like when the employees don't show up for work and they are the ones who work open to close. I think it is called "The Law of Familiarity" in the psychology books.

One point that I do not agree with Mr. Grant on is the amount of listings a broker must carry in order to stay alive and make some money.

Here is the best way I can explain how many listings an individual should carry since it is always a personal decision as to how hard one wants to work.

As usual it is all about the numbers. Let's keep it very simple. To begin with only 25% to 30% of the listings you are carrying are going to sell within the first 6 to 12 months. Sure I think we can get them all to sell given a long enough time period and if the seller drops his price low enough, but let?s use this formula for just a minute. If only 30% are going to sell (using simple math) then if you are carrying 10 listings and the average time for a business to sell is 9 months then you would sell 3 businesses. So 3 businesses priced at $335,000.00 = $1,000,000.00 (simple math) x 8% commission = $80,000.00 commission minus any split you may have with a company that you are working with. I believe that most companies charge their brokers a 50/50 split so in this case a broker would only make $40,000.00 for 9 months work. In our office we start the guys out at 60/40 and then raise them to 70/30 with the company keeping 30% after about a year if they are still in the business.

My point to sharing this example with everyone is that you need to have a larger amount of listings if you want to make any money. And true given the tight credit market that we are in today you had better have a lot of listings and you better be a creative deal maker and understand all of the options available to a seller and a buyer.

At American Business Brokers we knew about this theory of having to carry more than 10 listings a long time ago and created a back office system that would allow our brokers to carry up to 30 and 40 listings while we took care of the back office so that they would have the time to do what they do best and that is ...

Investors buying big businesses ...

Ney, thanks for the good advice. I think your readers might be interested in how I got into this brokering/intermediating biz by shear luck and being in the right place at the right time and jumping on an idea without hesitation.

In reality I am not a business broker or M&A specialist as you describe in your articles. I fell into this acquisitions thing by accident in 1999. As a car collector, I've been around some amazing vehicles and even more amazing people with a lot of money. Anyway, I was at a collector car auction in Vegas in '99 and overheard a few guys talking about putting their money into something of big value. I heard one say they had about $5 billion to invest but not sure what to invest in. Well my ears exploded and I just had to walk over and investigate. Once I introduced myself as a car guy, talked with them about my lifelong love affair with cars we clicked. Once everything cleared the air we exchange biz cards and I told how I help eager investors spend their money. They welcomed me in the fold. Anyway to make it short, after talking over details and what I would get to find them something "BIG", within a month I found a $3.5 Billion five star hotel group. The deal got done in about nine months as both sides were very freindly throughout the deal process. I received enough money to pretty much retire. After this one closed I did a few more because my reputation for searching and delivering what the buyers were looking for got around the inner circles. I even helped some find their dream cars, high end watch collections, helped a on a 10 car dealership, found a 1922 ship that was to be convetted into a casino and afew more interesting tid bits. My last gig was '05 as I grew tired of it all and decided to travel with the wifey for a few years. Now that I've seen the rest of the world ( it ain't all that great), I'm glad to be back in the good ol' USA playing with my cars. But I get easily bored. So I want to do some more deals. I've had a few firms with lots of cash asking about mid to large companies for purchase. Two buyers are looking at anything up to a billion, private companies and family owned type businesses. I'm also talking with one person, (I helped him pipleline co a few years ago to the hotel guys) looking for infrastructure investments as well. I know all this seems far fetched but I've never done anything normal. Through all the deals from 99-05 I even became partner in two jack-up offshore rigs off the gulf coast. They are still pulling in the rental fees. Like I said, I'm bored and I love doing the deal hustling. I think we will always have money guys who can do the big stuff, you just have to know where they are and get 'em what they want. Thanks for listening and I wish you and your followers continued success in this strange business.
Mikey ...