November 21, 2022
This was a call I took this week and the answer I guess depends very much on the company! There are a whole load of business brokers out there who exist to do one thing and they do it well – take money from business sellers for upfront fees, provide unrealistic valuations and then not sell the business. Others sell firms, but only once they have strongly encouraged you to sell to a linked party for a low price, and then cream off a huge fee. Most will tie you in for a specified time frame.
Estate Agents with a twist
Business brokers essentially act like estate agents, but with more than a bit of a twist.
They exist to introduce buyers to sellers and sellers to buyers. Some firms sell quickly, others do not. Jonathan Fagan Business Brokers provide premium services to sellers, which include exit strategies and long term business planning, extensive advice on valuations, achieving a sale and the likely value. We provide enhanced services to buyers as well, offering them early access to our listings, full advice on sales/purchases and featured advertising on our site. We work on a no deal no fee basis for purchases in any event.
We set a fixed fee to buyers, which is calculated at the outset of a firm listing for sale with us based on an estimation as to how much work we think we are going to have to put in to achieve a sale. We do not base our fee on the value of a sale.
How does the service start?
Our service starts with the need to attract sellers to list their business for sale with us. We spend a considerable amount of time on the phone speaking to owners of law firms who are thinking about a disposal of their practice or retiring, or just wanting to know roughly what to expect when it comes to considering a sale. We also provide exit strategy and valuation services on a standalone basis, which are used for a whole range of reasons including divorce, progression planning and comparisons for offers already received..
Sellers will spend some time with us going through putting a listing together and preparing the pre-sale pack in order to be ready for any potential buyers who express an interest.
Advertising
We field extensive enquiries from potential buyers, who will go on to our website and see our list of firms for sale, which is updated daily. Others will call up with specific requirements and ask what we have to match. We advertise in our newsletters, our website, the Law Society Gazette and across the web.
Filtering
The buyers have to be filtered quite extensively, because there are large numbers of potential buyers out there who have very unrealistic expectations and/or no intention of purchasing a business, but are simply making enquiries to see what’s out there rather than actually being in a position to proceed.
Of course, there is a difference between a deal not going through because the parties do not feel comfortable with it, and dealing with individuals or businesses who have no inclination whatsoever to make a purchase, and waste everyone’s time.
Processing
We spend a lot of time going through the process of listing buyers onto the system, ensuring they have signed agreements and NDAs.
We introduce buyers to sellers, getting consent to release details, providing information about the sellers to the buyers, and then going back and forward between them in order to obtain sufficient information to enable discussions to be had.
Negotiations
Very often after discussions have taken place, the parties will start to communicate directly or via their own professional advisers if these are larger deals, but usually with the smaller deals we stay fully involved as a third party to proceedings. The parties often come back to us for further strategic guidance at different times, and this will be both the buyer and the seller. We give advice to both sides in strict confidence and are involved in negotiations around offers. Similarly we can be quite involved when it comes to putting together heads of terms to get an agreement completed.
Summary
The work of a professional business broker is more than being just a marketplace for the sale and purchase of businesses, as to get the actual deal across the line can require quite a bit of input from us as advisers.
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