29 Mar Top Tips for Protecting Your Interests
In our previous article, we discussed a few of business broker legend Doug Robbins’ key ideas for brokerage professionals. These tips were initially presented during his Tools of the Trade webinar “25 Tools for Success” with Business Brokerage Press. Let’s continue or look into the key steps that business brokers should be taking to optimize their success.
Qualify Clients
Due to the limited number of sellers who are actually ready to sell at any given time, business brokers must take steps to qualify potential clients. Robbins notes that before he takes a business to market, he performs his own due diligence, which he calls a comprehensive business assessment.
Robbins comments that most businesses actually do fail due diligence. He astutely points out that if a business fails to pass his due diligence, it certainly will fail to pass the buyer’s due diligence. Other key steps include establishing a value range and studying to find any obstacles or impediments to the sale, as these issues should be addressed up front. In short, he wants to develop a clear picture of what the future looks like for the business.
There are many intangibles that can impact the potential sale of a business. He has found that it is very common for businesses to have silent partners. In fact, he notes that in businesses owned by men, their wives play a key decision-making role about 60% of the time.
Leverage Contracts
Another factor that can’t be ignored is that business brokers and M&A advisors must protect their own interests. He notes, “The seller’s got a CPA and so does the buyer. The seller has a lawyer and so does the buyer. What happens once everybody starts talking is that buyer and seller’s CPAs and lawyers start talking to each other and intermediaries are boxed out.”
In order to properly address this, Robbins has created contracts that require his clients to direct their CPA and lawyers to work directly with Robbinex®. Likewise, Robbinex® utilizes confidentiality agreements that require the buyers’ lawyer and CPA to deal directly with Robbinex®. The end result is that Robbinex® is not boxed out of the process, but instead remains firmly at the center of the flow of communications.
Take Advantage of a Good Website
There are other steps that business brokers can take to improve their odds of success. A good website that is updated and maintained with videos, testimonials and education will generate leads. Robbins commented that Robbinex® spends upwards of $50,000 per year on their website and that it is an effective lead generator. He also notes that his book is “one of our most powerful sales assistants. My book is a wonderful tool.” A competent, information packed website and book can serve as incredible tools for brokerage professionals.
Understand Clients
It is essential to have the capability to understand and read a client, and understand their emotions and where they are coming from. Robbins insightfully commented, “I can always tell someone whose consciously competent as soon as I ask them a tough question. You can see their brain goes into a fast search mode. They take 4 or 5 seconds before they start to answer. Oftentimes, they’ll rephrase the question to buy more time before they give you an answer. But the real problem is that most business owners are unconsciously competent. They don’t know what they do in fact know, until they are forced to demonstrate that they know it.” He feels that it takes a businessowner about 20,000 working hours to reach this important unconscious competency stage.
A great deal goes into building a successful intermediary practice. As Robbins points out in his webinar, there are many and diverse factors that are involved. Ultimately, business brokers and M&A advisors need to evaluate vast amounts of data and realize that every client and situation will be unique. Robbins’ insights can help you achieve the kind of insights you need to consistently protect yourself and achieve fulfilling levels of success.
