Ways to Generate Qualified Prospects – Business Brokers, Intermediaries, Investment Bankers, M&A Specialists

In a previous post we talked about ways to generate prospects on your own.  Those techniques may be applied by you or by business brokers and business intermediaries as described below.

Business Brokerage.  According to industry statistics, only 30% of Buyers purchase the type of business they first start calling on, and this number increases with smaller businesses.  This is one way brokers add value.  Brokers can take callers who decide they are not interested in the first business and move them to another businesses they have for sale.  A broker with many different businesses can move a prospect through many opportunities.  This is particularly important if your business is unlikely to generate phone calls directly either because of the business type or because of business conditions.

Intermediaries, Investment Bankers, and Merger and Acquisition Specialists are all brokers and advisors with different networks and abilities.  As the transactions get larger the advisory aspect of a broker relationship increases in value to the Seller.  It is likely that good advice will increase the final value by at least 15% above the original starting value.  It may not be worth paying a consulting fee on a $100,000 sale but for a ten million dollar business, that is a whole different ball game!

In general, “business brokers work with businesses up to about $5,000,000 in value; intermediaries handle businesses worth between $2,500,000 to $10,000,000; and investment bankers and merger and acquisition specialists manage the $5,000,000 to $50,000,000 on up crowd.  Still, there is a lot of overlap between the groups at the edges.                         

Co-brokerage.  Many brokers co-broker with other brokers they trust.  Since confidentiality is so important a good broker will not send your confidential file to just anyone.  The prospect must be qualified first.  A good broker is always concerned with respecting and protecting the Seller’s confidentiality.  A few brokers will sell an unlisted business but, historically, many of these brokers have not been paid, so many refuse to sell an unlisted business or a business with an open listing.  Every broker keeps a list of active Buyers which makes co-brokerage a useful technique particularly for smaller profitable businesses.

 

Gregory R. Caruso, Esquire, CPA, CVA
Harvest Business Advisors
Business Brokers, Business Valuation, Business Transactions
410-507-5441
gcaruso@harvestbusiness.com
www.harvestbusiness.com