How to Deal with Business Brokers

Business brokers specialize in helping business owners sell their businesses. Most business brokers represent the sellers rather than the buyers. As a result, business brokers are responsible for qualifying buyers to weed out “tire kickers” and make sure that only buyers with the motivation and financial resources to purchase a business are presented to sellers. There are two reasons for the need to qualify buyers:

  1. Save the broker’s and sellers’ time. Statistics have shown that only 10% of business buyers actively looking to purchase a business end up buying a business. The other 90% never buy a business in their lives.
  2. Protect the sellers’ confidentiality. The business could be substantially harmed if the word goes out that the business is for sale. Confidential information should only be given to serious buyers to reduce this risk.

What should a business buyer do to be considered a serious buyer?

  1. Spend the necessary time: Buying a business is time and energy consuming. Serious buyers are not afraid to devote their time to research the right business. Business brokers generally require that buyers come to their office for a meeting before providing them with more information. Buyers who negotiate where to meet or require considerable information before meeting are generally considered not very serious about buying a business.
  2. Show proof of available financial resources: Brokers only work with buyers who can demonstrate that they have the financial capabilities to purchase the business or borrow the necessary funds. Buyers should not be offended when asked for proof of financial capabilities.
  3. Show focus and determination: Asking information about too many unrelated businesses is generally interpreted as lack of focus and discourages brokers from working with buyers. Unfocused buyers are very difficult to work with as brokers cannot identify their needs and as a result cannot help them.

Business brokers can be an excellent source for detecting the right business to purchase. Brokers know the market and can help serious buyers locate and purchase profitable businesses that fit well with buyers’ personalities and goals. However, buyers interested in getting the most value from brokers should be ready for purchasing a business and should prove it.

Powered by Omar Kettani

Published by

Omar Kettani

I am a business broker in Toronto. I am specialized in selling businesses with less than $10 million in value. I have a master of Engineering from a top-notch French Engineering school and an MBA from the prestigious Richard Ivey Business school in the University of Western Ontario where I specialized in entrepreneurial finance. I have a long experience in banking, business ownership, marketing and finance. I dedicate my career to helping small and middle size business owners sell their businesses to the right buyers.

One thought on “How to Deal with Business Brokers”

  1. Hello,

    I have to admit that I wanted to buy a business sometime ago, I used some of the things I should not have done. I will take into consideration these advices before contacting you. Your article is indeed very straight to the point, short and sweet.

    Thanks

    James

Leave a Reply

Your email address will not be published.