Working With Business Brokers to Buy a Business
Attributes of a Good Buyside Business Broker
You've been thinking about business acquisitions for a while and now you're finally ready to pull the trigger. It's time to look for a buyside broker, but to get the best results you'll want a buyside business broker who shares attributes with the best in the field.
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.
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Have you ever hired a buyside business broker? How did that go? If you're on the verge of engaging a buyside business broker, what are some of your biggest concerns? We welcome your comments, questions and tips regarding what to look for when engaging a buyside business broker.