The Five Buyer Qualities Most Important to a Business Broker

RC-100th101208-081012-RC-0243.jpgLast month I had the honor of being a guest panelist in the Entrepreneurship through Acquisition (EtA) class at Harvard Business School. This elective course is designed to teach aspiring business owners each step of the business acquisition process. The course professors invite guest experts to participate in class discussions on various topics as they study how to buy a business. One of these topics is how to source deals through intermediaries and business brokers, which is the discussion I was asked to be part of. There were a number of great conversations the students initiated during the class, but three major themes dominated the day. In this three-part series I’ll highlight each of those major topics.

The Five Buyer Qualities Most Important to a Business Broker

No matter what the profession may be, everyone has a set of preferred qualities in the people they work with. Coaches have star players, manufacturers have plant managers, financial planners have active investors – and business brokers are no different. There are specific characteristics and qualities business intermediaries and business brokers are looking for in buyers. In sifting through the dozens and dozens of buyers looking at each deal, it’s only human nature that a business broker is going to favor those buyers who display a certain set of qualities that he knows will translate into happy sellers and successful transactions.

  • Quality #1: Buyers who know their stories

Sellers want to leave their businesses with new owners they feel confident will carry on their legacy – don’t underestimate the importance of that dynamic. So “knowing your story” as a buyer is paramount, and equally important is being able to tell that story to a business broker. Sellers want to understand your background, what you’re trying to accomplish and especially why their business is attractive to you. So it’s important for buyers to start by understanding their own motivations, objectives, limitations and ultimate goals, identifying how those factors apply to any business they are considering and communicating all of that information to a business broker.

  • Quality #2: Buyers who have their funds lined up

This sounds so simple on the surface, but you’d be shocked how many buyers don’t really know exactly how they are going to fund a deal (and “I can get a loan” is not a plan, FYI). Every business you look at should include some sort of funding details – whether or not there is pre-arranged bank financing, whether or not the seller will agree to carry a note and what the expected down payment amount the buyer needs will be. Business brokers don’t expect buyers to have every last penny accounted for, but they do expect buyers to have the cash required available and to be able to define the rest of their funding plan in detail.

  • Quality #3: Buyers who are impressed

A buyer who focuses on the positive aspects of a business and shows she’s genuinely excited about the opportunity is going to get a lot more attention from a business broker than a buyer who constantly wants to tell him the things that are wrong with a business. Every business broker will tell you there’s no such thing as a perfect business, but those buyers who insist on harping on problems and negatives are the first ones a business broker turns away. Sellers need to like the people they sell their businesses to, so a business broker’s feedback about a potential buyer is critical. When that feedback includes how impressed the buyer is with a business, it will go a long way with the seller.

  • Quality #4: Buyers who ask, not tell

Just as most parents love talking about their kids, most business owners love talking about their companies. Business brokers know this, so they tend to appreciate buyers who approach business listings with an open and curious mind. Buyers who “know it all” and spend more time telling a business broker what they know about a business or industry (or think they know), rather than showing a genuine interest the learning about the company are the buyers who will typically be turned away. If a business broker feels like a buyer is going to come across as arrogant or insulting, he’ll never allow that person to move forward in the buying process.

  • Quality #5: Buyers who follow through

Most successful business owners have something in common – when they say they’ll do something, they do it. So it comes as no surprise that these sellers are going to expect the same type of follow through from buyers interested in their companies. Be careful not to make idle commitments to business brokers and sellers that you either can’t deliver on or don’t know for sure that you can. This can be as simple as telling a business broker you’ll call her back tomorrow and forgetting to follow up, or as major as proposing a deal point that you have to take off the table later. Business brokers will stop taking you seriously if you start showing a trend of failing to follow through.

This was the final topic from my visit to Harvard Business School’s EtA class. Previously I discussed The Role of the Business Broker in the Business Acquisition Process and The Three Biggest Mistakes Buyers Make with Business Brokers.

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About Dallas Business Broker

Jeremy comes from a long line of entrepreneurs – his great-grandfather ran a Dallas dairy farm at the turn of the 20th Century, his grandmother founded one of Dallas’ oldest private schools in the 1950s and his parents started a specialty advertising firm in Garland in 1982 that is still in operation today. So it’s no surprise that Jeremy would find himself working directly with business owners today. He understands the unique challenges business owners face and knows how important business transaction services are to their futures. Jeremy’s education, creativity and experience, along with his straight-forward, meticulous personality are all keys to his success. Prior to Sigma Mergers & Acquisitions' ending its contract with VR Business Brokers, the world’s largest business sales franchise organization, and becoming an independent firm, Jeremy became one of the most decorated and successful agents in the 35-year history of that franchise. Starting in 2007, his first full year with Sigma, Jeremy was named VR’s No.1 worldwide agent – the first “rookie” to achieve this prestigious feat in franchise history. He finished No.1 a second time in 2013, becoming the franchise’s only repeat winner. And in 2014 he was well on his way to another No.1 ranking before Sigma ended its franchise relationship. Jeremy was also a top-ten agent three other times, and received the franchise’s quarterly National Victory Register award 25 times in 33 quarters. Jeremy graduated from Texas A&M University in 1998 with a B.S. in journalism and a marketing minor, before earning an MBA from The University of Texas at Dallas in 2003. Prior to joining HBG, Jeremy spent seven years at KRLD NewsRadio 1080 and the Texas Rangers Radio Network in advertising sales and sales management, then served as vice president of accounts with Reef Securities, an oil and gas broker-dealer. Jeremy is also a licensed real estate salesperson in the State of Texas.
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2 Responses to The Five Buyer Qualities Most Important to a Business Broker

  1. Pingback: The Three Biggest Mistakes Buyers Make with Business Brokers | DallasBizBroker Blog

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