Buyside brokers represent buyers' interests during the acquisition process.
Many business buyers choose to represent themselves in an acquisition, but buyers who enlist the aid of a buyside business broker enjoy the benefits of having a brokerage professional on their side.
When you look for a buyside broker, one of the first things you'll discover is that almost all business brokers claim to have exceptional buyside brokerage skills. However, only a few are actually capable of delivering first-rate buying power for their clients. The best buyside brokers share a handful of key characteristics that make it easy for you to separate the pretenders from the genuine articles.
- Industry contacts. A top-tier buyside business broker has significant industry experience and an extensive contact list to prove it. Contacts are critical in a business purchase for the simple fact that a lot of available companies are never listed. If your business broker can't rely on a network of industry insiders to dig up unlisted business opportunities, your purchasing options will be extremely limited.
- Buyer focus. The best buyside brokers focus on one thing: Buyers. The business-for-sale industry is rife with buyside brokers who also represent sellers and do an okay job representing buyers. If you're looking for a buyside killer who can deliver real advantages, focus your search on brokers who specialize in representing buyers' interests.
- Time. Great buyside brokers are in high demand. Ideally you would love to find a high quality business broker who will devote 100% of his time to your acquisition search, but that isn't going to happen. A business broker who is willing to sign you as his only client probably isn't as good as he says he is, but an over-extended business broker can be equally ineffective.
- Local experience. An excellent business broker that lives and works a thousand miles away is never the best choice, no matter how impressive his credentials are. Local knowledge is worth a lot in the purchasing process, especially when it comes to negotiations and establishing professional relationships with local lawyers, accountants, and lenders.
- Due diligence expertise. Before you hire a buyside broker, ask him to provide examples of problems he has unearthed while conducting due diligence with other clients. If he can't be specific, it could be a sign that his due diligence skills aren't up to snuff and you need to find a buyside business broker with more due diligence expertise.