15 Aug 5 Tips for New Business Brokers
In our last BBP webinar, we talked to industry legend Doug Robbins. Robbins focused on important tips for new business brokers to follow in order to stay in the game. The webinar can be found here.
Robbins has completed more than 1000 assignments involving advising clients on mergers and acquisitions, valuations, refinancing, and more. He actively supports the industry through dedicating significant time towards educating others, through memberships, workshops and lecturing. During this webinar, he explored what new business brokers need to do to so they can stay in the business and thrive.
1. Manage Client Expectations
If you’re a new business broker or M&A advisor looking to be successful, it’s important to manage the expectations of your clients. Sellers need to know that selling a business is not an overnight affair. They must truly understand that the process takes considerable time.
2. Prepare for Unexpected Events
Even after a buyer is found and a sale is lined up, it is quite possible for measures beyond the business broker or the seller’s control to take place. For example, problems with lawyers overcomplicating the selling process can delay successful transactions. He cites one specific situation in which one lawyer created an 86-page document only to have another lawyer make 802 changes to that document. The end result was over $20,000 in legal fees.
Unpredictable events can arise which will impede the transaction of a business. Robbins notes one such unpredictable event in which an employee of a business claimed that he was actually due shares and could thus hold up the sale, and he did. Eventually, the matter was resolved and the transaction took place, but a great deal of time was lost. As Robbins states, “These problems can come out of left field.”
3. Use Your Time Wisely
As Robbins points out, there are only about 2,000 workhours in the typical person’s year. No doubt, this underscores the importance of using one’s time wisely.
4. Make Sure Evaluations are Accurate
Robbins points to the early days of his business. He noted that they had too many active businesses and that a large percentage of those businesses were listed for far more than their actual value. Creating accurate evaluations was transformative for his businesses, as it directly led to more businesses being sold.
5. Be Patient
In Robbins’s experience, about 200 buyers touch the files of every business sold, with the record being a truly whopping 849. The business brokerage profession is one that requires considerable patience. As Mr. Robbin stated, “the average practitioner in the lower market usually sells four transactions in three years.
An important fact that all new business intermediaries and business brokers need to know is there is only an 18-to-30-month life expectancy within the profession, and that cascading plays a key role in the process. At the end of the day, as Robbins observes, the hardest part of the profession is securing not just new clients, but new qualified clients. In our next article, we will explore what new business brokers and M&A advisors need to do to ensure that they do, in fact, have those clients.
