06 Jul 3 Tips from Leading Brokerage Expert Doug Robbins
In our last article, we covered some essential information from legendary business broker and founder of Robbinex®, Doug Robbins. Robbins recently joined BBP for a webinar, which can be accessed here. This article will explore steps for optimal seller management and how to avoid some substantial M&A pitfalls.
Correctly Manage Your Time
It is key for those in the brokerage industry to remember that time management is essential for success. Mr. Robbins highlighted the intensity of the amount of work of being a Business Broker or M&A Advisor. He noted that the average transaction that Robbinex® works on in the lower mid-market takes approximately 622 working hours. Robbins pointed out, “That means if you’re doing all the jobs yourself, you’re going to be hard pressed to do three deals a year…we did some studies and found that the average Broker did four deals every three years.”
All of this also means that Business Brokers and M&A Advisors are required to invest a good deal of time in finding a new seller. Once Robbinex® decides to take a business to market, they enter phase two, which is a seven-step process consisting of about 75 working hours. Importantly, it is during this phase of the process that sellers verify, in writing, that everything they have reported about the business is indeed accurate.
The correct use of time often comes down to developing a system and then using and refining that system. Robbinex utilizes a three-phase process for dealing with sellers. The first phase involves a comprehensive business analysis. The second phase is centered upon the creation of a seven-step plan. And the third phase is executing the plan.
Evaluate What a Business Needs
There are several parts of the process of working with a seller to successfully sell a business. One key area is to evaluate a business’s preliminary needs. After this, Robbinex® recommends how to fix problems within the business. Mr. Robbins astutely points out that the range of problems that can exist are quite varied, and this underscores the fact that every business must be treated as a unique entity by Business Brokers. Necessary fixes can range from addressing marketing problems or real estate issues to discovering that an employee is stealing from the company and/or the need to fire one or more employees and find more competent replacements.
Carefully Monitor the Legal Aspects
Robbins puts a great deal of importance on contracts and legal documents. In his 45+ years of experience, Robbins has learned that lawyers must be carefully managed and watched throughout the buying and selling process. It is quite important to make sure that not only are lawyers kept in check throughout the process, but also that sellers are guided towards retaining competent and trustworthy legal advice.
For the majority of your clients, selling their business will be the single most important business decision of their lives. This means that the selection of a competent lawyer or law firm is of extreme importance.