When looking to buy a business often the business seller has retained a business broker to represent the seller, locate a buyer, assist with negotiations, guide the due diligence efforts and coordinate the closing process.
If you are seriously trying to find a business to buy you will come in contact with a business broker at some point. Here are some tips that might help you:
- Make sure you know who the broker represents and get it in writing. In small business sales it is most common for the broker to represent the seller (but the broker still usually has a duty to treat you fairly and honestly). Know the standard the broker is working under.
- Even though the business broker may represent the seller don’t automatically assume he/she is your enemy
- If you don’t feel like the broker is treating you fairly and honestly…go somewhere else.
- Make sure you understand the source of any information provided to you by the business broker. Did the seller generate the info? Accountant? Broker? Always ask.
- When you receive information live by the old saying “Trust but verify.” If there is a reluctance to allow you to verify certain information… that should be a warning sign.
- Move deliberately through the process but at a decent pace… time kills deals. A fast no is better than a slow maybe.
- Be responsive to all parties, return calls promptly, check your emails, etc. If you are not interested that’s fine, tell the broker and move on, but don’t just go “radio silent” without advising the parties that you have lost interest.
- Finally, treat all information received as confidential, do not try to get cute with this. I’ve seen many buyers get themselves into a pinch because they failed to comply with confidentiality agreements. Immediately return to the business broker any information requested that is bound by the confidentiality agreement you sign.
Buying a business is a grind but the rewards are great for those who can get through the process with thoroughness while maintaining the goodwill of all the parties.