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No one can pinpoint exactly when business brokerage began—or how or why. However, the following advertisement suggests that business brokerage at some level has been around for over 250 years.
“Slitting Mill and Iron Forge. To be Sold a good Penniworth, a Slitting Mill completely finished and furnished, situated in the middle of near 29 Forges in the Compass of 12 Miles, with a well built Forge with Two Fires, and conveniency for a third; together with a well built and well accustomed Grist Mill, all standing on one Dam; on as constant a stream as this Land affords; with accommodations for other Water Works; A good Dwelling House, Coal House, and above 6 Acres of Land, and a good Orchard upon it, said Works stand on Namasket River in Middleborough, 13 Miles from Plymouth, and 10 from Taunton. All finely situated for a County Seat; and now Lets for 379 Pounds per Annum. Any Person or Persons minded to purchase the same may inquire of the Rev. Peter Thacher of Middleborough aforresaid, or of the Printer hereof, and know further. N.B. The Reason of this Sale is because the Person wants the money for it, and intending to leave off that Business.”
Boston Gazette, May 11, 1742 (reprinted in Every Day Life in the Massachusetts Bay Colony.)
During the 60s, brokers dealt primarily with the blue-collar worker willing to leave his factory job and take the risk of owning a small business. These buyers often bought bars, small fast-food and coffee shop operations, donut shops, and small retail operations.
In 1962, the average price of a small business was about $16,000.
During the 70s, foreign buyers entered the market. Because of their language difficulties and their hard work ethic, small business was very appealing.
During the late 60s and 70s, franchising burst onto the small business scene, replacing many of the traditional mom-and-pop businesses. On the plus side, franchising created new opportunities for business brokers. Franchisors were looking for business people rather than experts in the particular industries. A buyer with no working knowledge of printing could now buy a quick print franchise.
The 80s brought about the franchising of business brokerage itself. This new trend brought in a lot of brokers from the corporate world who had no experience with the profession, and in most cases no experience in small-business ownership. This new business broker had to resolve all the issues that had previously been taken care of by the corporation. Additionally, there were no perks or benefits, paid vacations, sick days, or—to make matters worse—no paycheck. Those who survived, however, brought something valuable to the industry. They understood business and numbers and were comfortable in dealing with outside professionals and advisors. They also brought a great interest in handling the sale of the larger business.
If the business brokerage industry changed with these new entrants, so did the buyer with whom business brokers worked. Those corporate people who lost their jobs through downsizing, mergers, acquisitions, etc. did not all become business brokers—many became business buyers. The late 90s were good years for the profession.
Certainly the many technological advances would top the list of changes in the industry over the past few years. Where does one begin? Web sites, email, the Internet, Web-based listing sites, online programs, etc.
The many listing Web sites have reduced business brokers’ dependency on newspaper advertising. The owners of these sites are well aware of this, and let’s face it: they are in business to make money. Business brokers are giving “control” of their most valuable asset—their listing base—to these Web sites. On the plus side, they create a buyer base that is essentially worldwide, and deals are being made because of it.
Only time will tell how the how the 2010s play out. There is no doubt that technology has and will continue to dramatically influence business brokerage.
We continue to believe, however, that business brokerage will always be a service and people business.