Why brokers can mess up your deal
In this video, The Dealmaker’s Academy founder Jonathan Jay reveals:
- What motivates business brokers the most
- How brokers can mess up your acquisition deal
- Why a business seller going through a broker is likely to have unrealistic expectations about the sale value of their business
Prefer to read this? Here’s the transcript:
Today I want to talk about why brokers can mess up a deal for you.
Actually there are several reasons why a broker can mess up a deal for you.
And sometimes and most times actually the broker is being paid some sort of fee.
It could be tens of thousands of pounds in advance.
So in actual fact their motivation for putting a deal over the line is probably pretty low.
Now they’ll never admit it and they would always deny it but it’s a fact.
Call me cynical but I believe it to be absolutely true.
Now they will say that their real money is made on the percentage of the success fee that comes as a percentage of the sales value.
Well in actual fact they can’t count on that.
What they can count on is the upfront fee that is being paid by the person listing their business.
Now the reason a broker can mess up a deal is because to get that upfront listing fee they have possibly been so positive about the potential sale value of the business they’ve elevated that value in the mind of the seller to the point that the seller now has very unrealistic expectations as to what the price or the value of the business is.
So when you come along with more realistic expectations the two of you don’t meet very well.
So in actual fact, the broker could do the seller a disservice.
We’ll be coming back to this point in future videos.
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