How to Make Sure Your Business Broker is on Your Side
While, regretfully, a great many intermediaries in the UK business transfer industry and around the globe, worry first about collecting a fee and promoting their brokerage, often at the expense of their clients, at Turner Butler our priority is selling your business. For us, this is a fundamental value and to demonstrate our commitment to it, we maintain a “No Sale – No Fee” policy.
In simple form, economic theory dictates that in an efficient market, businesses for sale should be priced at exactly the point that stratifies both seller and buyer. With a keen focus on closing deals, Turner Butler (TB) strives to reach such equilibrium through familiarity with the markets, understanding of our clients and precise valuations. Towards this goal, we have taken measures to align our interests with those of our clients, such as employing top professionals, offering free business valuations and never charging an upfront fee.
However, most business brokers choose to behave differently, concerning themselves with short term objectives such as mitigating their own risk, collecting fees and promoting their business, even if this puts them at odds with their clients, jeopardizes deals and harms their reputation. Here, therefore, are a few of the more common “deceptions” perpetrated by many brokers that you should look out for:
Upfront Fees – Money without Merit
Brokers who charge you (business sellers) a fee to use their service, may tell you that these monies signal your seriousness about pursuing the sale and that they help them to cover marketing and other costs associated with said sale. In effect, these intermediaries are usually more interested in receiving their fees upfront to remove the risk that the transaction may not complete.
Ask yourself, would you pay a prize fighter his prize before or after the fight?
Brokerages such as Turner Butler, with proven success stories over many years and where commissions are paid at closing, are justifiably confident that they will close deals and are readily able to cover business sales costs.
Overvaluation – Intentional Misdirection
It a statistical fact that most business owners tend to overvalue their businesses because they believe they will find a buyer who is willing to pay a premium (e.g., because of the business’s USP or potential) or simply because they require substantial proceeds to pay off debt, retire, or similar. Unsavory brokers exploit this by overvaluing businesses and promising potential clients bigger payoffs. This helps them to secure clients and get paid more upfront, even if the business eventually sells for less.
Disclosing Broker Name – Ensuring Exposure
One last practice whose shadiness is less evident, is that many brokers publish their names as the broker of record for the sale. By doing so, such brokers are associated with more deals, even if a large number of them never actually happen.
Turner Butler, Experience and Trust
With over 3 decades experience in selling businesses, we have seen these practices all too often and have enacted policies that reflect our pledge never to behave in such a lamentable manner. Just as we recommend that our clients disclose true information, so too do we advocate our own transparency. TB meticulously conducts each business valuation using a variety of methods and tools to reach a realistic valuation that we know will be acceptable to both parties. We share this information with our clients prior to being engaged and approaching buyers, ensuring their buy-in. Additionally. we collect a fee only when a business has sold. In short, our interests are aligned with are clients, ensuring the best possible outcomes.