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The Misconception about M&A Brokers vs Main Street Business Brokers
I was approached yesterday by someone who said he was looking for a M&A brokerage to handle a big deal. I asked, why are you not considering me? His comment back was that “all i did was main street and he didn’t feel I had the resources.” WOW what a eye opening experience. But then I thought about it and laid out for him and myself some subtleties that I felt he had overlooked.
1. Business Brokerage and M&A firms are businesses and have to make money in order to have resources. As a contingency based firm who only gets paid on success the fact that we do literally hundreds of transactions a year while our average competitor only does less than 20 on average means we have the Financial Bandwidth to spend on the front end and go the distance in the Negotiation.
2. Fiscal Strength: One would think that a larger firm thinking of engaging a professional would want to gage the strength and vigor of the partner they are choosing to work for them. In many contracts with publicly trading companies it is required to submit the financials of your firm to gage your strength to fulfill the engagement. In brokerage or M&A it should be the same. A small firm when not having volume and cash flow will inevitably run into cash flow challenges during the sales process and you as a seller should wonder if they are truly maintaining objectivity when working on the sell side and feeling a financial pinch.
3.Experience Matters: The Mechanics of deal flow are the same regardless of the number of zero’s on the deal. Lawyers are Lawyers, Lenders are Lenders, and Buyers and Sellers remain the same. Your Intermediary or Broker should have battle scars and time in the trenches to not only see the big picture but manage the details of the deal as well.
2. Fiscal Strength: One would think that a larger firm thinking of engaging a professional would want to gage the strength and vigor of the partner they are choosing to work for them. In many contracts with publicly trading companies it is required to submit the financials of your firm to gage your strength to fulfill the engagement. In brokerage or M&A it should be the same. A small firm when not having volume and cash flow will inevitably run into cash flow challenges during the sales process and you as a seller should wonder if they are truly maintaining objectivity when working on the sell side and feeling a financial pinch.
3.Experience Matters: The Mechanics of deal flow are the same regardless of the number of zero’s on the deal. Lawyers are Lawyers, Lenders are Lenders, and Buyers and Sellers remain the same. Your Intermediary or Broker should have battle scars and time in the trenches to not only see the big picture but manage the details of the deal as well.
At the end of the day assess your team on character and proven outcomes…not flash because what you need in doing the deal is forethought, experience, and results.
For more on selling your business go to www.yourfloridabusinessbroker.com
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