Both Sides of a Deal

As business brokers we live on both sides of a deal, except in almost all cases, the participants only focus on one side…the money, or as psycho-economists call it, the organic side.

Sellers say, I must have X dollars or no deal…Buyers say, my “advisors” tell me it’s only worth Y dollars…no more.

 

Now this logic works well in the domain of publicly traded companies or large organizations, but in the world we inhabit, the privately owned business there lives the other side of the deal… the emotional side.

 

A great marketer once said “There’s an ass for every seat”… the challenge is finding them and putting them together and that’s what we do. A small business is much more than numbers, it’s a dream the owner had and made happen, it’s a living testimonial to hard work. For many owners it really is an extension of their family, another child so to speak, in short, emotions that cannot be quantified with numbers. The skill set a good business brokers has will understand that and “guard the gate” to bring only those buyers who accept the numbers and see the vision of growing the business. It’s what we do…specifically “broker the process” and boy is it a process. From start to ending and it’s not a straight line. Many deals start to break down in this stage, and because it’s emotional, and neither side will admit it, an experienced broker can keep eyes on the target and move it forward.

 

Once a buyer has focused on a business the finance process begins. Far too many buyers just assume that a seller will finance the sale. A good broker reminds them that the business is selling so the owner can “cash out”…Will a seller do some financing? Yes, usually, and if they refuse, it could be a warning flag for the buyer.

 

Now where do you get the funding? As Willie Sutton the bank robber said “The bank, that’s where the money is” Most banks will loan through an SBA program… a government agency that will guarantee to the bank, up to 90% of the loan should problems occur. I have had many buyers say “I’ll speak to the SBA about a loan”. The SBA is simply an insurance company for bank loans… they do not lend money. We work with the buyer to place the loan in a bank that understands that specific type of business… not all businesses are alike, nor are all banks… We know where to direct the buyer.

 

If you plan to buy a business, or are thinking about selling a business, take your time selecting a broker. Meet with them, talk with them, and think about what kind of questions they ask because it’s when the broker gains an understanding of both the business and the personalities that a deal can happen. We listen more than we speak and have been doing it for a long time.