There is a saying in the legal profession “Any lawyer that represents himself has a fool for a client.”
So you have made the decision that you want to sell your business. There are many questions to ask yourself and your professional advisors. One of the most important will be, do I need a Broker or Intermediary to help me sell my business? The answer is YES. There are some rare scenarios in which a broker is not needed to find a buyer but, an Intermediary (whether it be a Broker or Lawyer) is ALWAYS recommended when negotiating the terms and sale of a business. A smart seller will NEVER represent themselves in a transaction of this magnitude.
Here is why: Picture two different football teams about to play each other on a Sunday. One team is from the NFL. The other team is a group of amateurs. The NFL team consists of professionals whose average height/weight is 6’6” 300lbs. They live, breath, and practice football every day. They watch hours of film and train religiously so that they are prepared for the perfect reaction to every play. These guys are like animals waiting to pounce on the first sign of weakness! They have played in numerous games and instinctually know how to play every situation that results in the best outcome…for them.
The amateurs average 5’10’ and weigh in at 170lbs and they have never played in anything more than a backyard scrimmage. Some of the players were athletes in high school or college but only a few actually played any football. Although they have watched football on TV and understand the rudimentary strategies, their focus most of the time was directed at the cheerleaders and beer commercials.
Who do you think will win this game? Well we all know the answer to that. The NFL team hands down!! The professionals have a ton of experience. The amateurs will have to make it up as they go. The amateurs would have to be borderline insane to even step out on the field with the professionals.
This may not be the perfect analogy but, the majority of private business sellers face a similar situation all too often when it comes down time to sell their business. Valuing their companies, Confidentially Marketing them, and Negotiating the terms of the deal is all a first time experience. When selling what is most likely your most valuable asset, most will agree that it’s definitely not wise to “learn as you go”. Most will only have one shot at this, it is extremely important to get it right the first time. The buyers on the other hand are almost always experienced entrepreneurs especially in the lower middle market. (Lower middle market= E.V. of $5M to $50M). Many buyers in this niche have made acquisitions countless times and know precisely how to win big against the amateur. The amateur players will learn, painfully, usually after the ink is dry and the deal is closed.
There are so many important factors to know when working on a deal. It just makes sense to hire a professional!! The second a seller opens his mouth, he or she is negotiating against themselves. It’s a proven fact! Don’t get talked out of millions or agree to terms that will haunt you for the rest of your life. Hire a professional intermediary- a shark! One that has done this 100x more than the buyer has. A third party intermediary is necessary to keep the buyer honest and on his toes at all times. That’s how you win and keep the playing field fair. My partners and I at Lisiten Associates are Top-Performing Business Brokers with 600+ deals and $3 Billion in transactions under our belts. This experience has given us “street smarts” on how to sell lower middle market companies in a manner that is most favorable to you- the seller!
Cody Weaver is a top producer at Lisiten Associates which has been ranked the #1 business brokerage in the NY Tri-State area for 7 consecutive years! For a complete list of our awards or to view our excellent exclusive business listings please visit our website at: www.lisitenassociates.com