06 Nov How to Get the Listing When the Seller “Already Has a Buyer” (Part 2 of 2)
Yesterday’s posting gave a few suggestions about the best things to say to a Seller Prospect who says “I already have a buyer” or “I know everyone who would buy my business.” Today’s posting is a continuation of that article outlining a set of strategies of how to carve out a buyer, or buyers, brought by the Seller, and get that exclusive listing.
1st Fall Back Position = No Carve-Out*
Offer the Listing Prospect No Reduction in the Fee, Broker is Willing to Walk Away from the Listing
When to Offer: For a Buyer Not Yet Known By the Seller
2nd Fall Back Position = Partial Carve-out*
Pay the Seller 25% of the Buyer Side (i.e. a 12.5% reduction in commission if Seller’s Buyer closes escrow)
When to Offer: For One, or More, Buyers That the Seller Can Name, But Not Yet Working With
3rd Fall Back Position = Partial Carve-out*
Offer the Listing Prospect Reduction in overall fee if that Buyer Prospect Purchases the Business (e.g. from 12% to 10%)
When to Offer: For One, or More, Buyers That The Seller Can Name, and Already Spoke To
4th Fall Back Position = Partial Carve-out*
Pay the Seller 50% of the Buyer Side (i.e. a 25% reduction in commission if Seller’s Buyer closes escrow)
When to Offer: For a Buyer that the Seller is Already Working With
5th Fall Back Position = Partial Carve-out*
Pay the Seller 100% of the Buyer Side (i.e. a 50% Reduction in Commission if Seller’s Buyer Closes Escrow); Which is the Same as You “Co-oping” with the Seller, Like You Would With Another Broker.
When to Offer: For a Buyer, With Whom The Seller Has Been Working, and You Believe Might Make an Acceptable
6th Fall Back Position = Full Carve-out*
Carve The Buyer Prospect Out, Take No Fee If the Buyer Purchases the Business (Note 2)
When to Offer: When You Believe That There is No Chance that the Seller’s Buyer Will Purchase the business
7th Fall Back Position = Get Something
Broker Agrees to Take a Flat Fee, or Hourly, Fee For Completing the Transaction For the Parties
When to Offer: When the Parties have the Terms Agreed On, But Need Professional Assistance to Finish the Transaction
*Note 1: For the first 6 positions, try to limit the carve-out, or partial carve out, to 30 to 60 days. After that, the regular Broker fee applies; the carve-out expires.
Note 2: In a “Full Carve-Out,” do not allow the seller to have the Broker’s Opinion of the Most Probable Selling Price (i.e. the “Valuation”) or the written presentation you have created to market the business.
By Len Krick, MBA, CBI, M&AMI, and Chairman of the IBBA education Committee
