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> Common fallacy is to imagine that the exact same deal at the same price would have happened without a broker. > Without a broker you may not find a buyer at

by dheera 2y ago

> Common fallacy is to imagine that the exact same deal at the same price would have happened without a broker. > Without a broker you may not find a buyer at all. This only applies if your business isn't super profitable and you're looking to get rid of it. If you have a wildly successful business and you enjoy running it, you don't need to find a buyer, you can wait until one comes along.

Aurornis 2y ago
Waiting for a buyer to show up with an offer is almost never optimal. A lot of sharks will show up and try to talk you down to low prices. Even if the business is wildly successful, a broker is going to help you shop for competitive offers and get the best price on the open market. And if your business is wildly successful and you enjoy running it, hiring a broker will let you focus more on running the business. Trying to learn how to sell a business is going to take you away from this hypothetical wildly profitable business that you enjoy running, which is neither good for your profits nor your enjoyment.
- csomar 2y ago
  > Even if the business is wildly successful, a broker is going to help you shop for competitive offers and get the best price on the open market. Exactly. I once went with a broker (not the US, so lots of options not to) because the broker (despite his fees) will come out on top of other options. I guess, in that case, the broker did earn his commission fully. I think most people have a negative idea of brokers because in some jurisdiction they can make it difficult for P2P to happen. This makes the brokers a defacto monopoly on the market; and they usually all follow each other on the rates.
einarvollset 2y ago
I do deals a fair bit larger than this, and so am obviously biased, but while this sounds appealing, the fact is that only once or twice out of the couple of dozen times I’ve heard back from founders that decided to DIY their M&A have I not thought to myself “you got taken to the cleaners”. The buyers on the other side are professional buyers. They get promoted by buying great companies for as little as possible. Most founders will only ever sell one business, if that. Buyers don’t care about their reputation with you, they do care about their reputation with a banker they may interact with multiple times.
- wjnc 2y ago
  Agree with this. Been on quite large deal teams in non-tech. We always made fun of the lawyers and merchant banks. They bring dozens of teens to do chores, sit in on meetings where serious business is conducted (best one was 2x4 people talking in a room with 60! people in silence in Teams) and generally do nothing that is of any value to us serious business people considering the deal. At the end of the period where we’ve worked our asses of creating possible avenues of value, both the contracts and financial arrangements materialize out of thin air. This is boring paperwork of course, so we keep on joking about the absence of value added and the fact that we pay them hundreds to thousands of euros per hour to get us coffee. (This started out as a cynical post, but this is I think how it is. They add unseen value, transactions are closed without legal and financial snags, and we deal-makers should be thankful for that. You can’t spend a week pissing on commas in a contract if someone hasn’t written it first.)

by dheera 2y ago

Aurornis 2y ago

Waiting for a buyer to show up with an offer is almost never optimal. A lot of sharks will show up and try to talk you down to low prices. Even if the business is wildly successful, a broker is going to help you shop for competitive offers and get the best price on the open market. And if your business is wildly successful and you enjoy running it, hiring a broker will let you focus more on running the business. Trying to learn how to sell a business is going to take you away from this hypothetical wildly profitable business that you enjoy running, which is neither good for your profits nor your enjoyment.

csomar 2y ago
> Even if the business is wildly successful, a broker is going to help you shop for competitive offers and get the best price on the open market. Exactly. I once went with a broker (not the US, so lots of options not to) because the broker (despite his fees) will come out on top of other options. I guess, in that case, the broker did earn his commission fully. I think most people have a negative idea of brokers because in some jurisdiction they can make it difficult for P2P to happen. This makes the brokers a defacto monopoly on the market; and they usually all follow each other on the rates.

einarvollset 2y ago

I do deals a fair bit larger than this, and so am obviously biased, but while this sounds appealing, the fact is that only once or twice out of the couple of dozen times I’ve heard back from founders that decided to DIY their M&A have I not thought to myself “you got taken to the cleaners”. The buyers on the other side are professional buyers. They get promoted by buying great companies for as little as possible. Most founders will only ever sell one business, if that. Buyers don’t care about their reputation with you, they do care about their reputation with a banker they may interact with multiple times.

wjnc 2y ago
Agree with this. Been on quite large deal teams in non-tech. We always made fun of the lawyers and merchant banks. They bring dozens of teens to do chores, sit in on meetings where serious business is conducted (best one was 2x4 people talking in a room with 60! people in silence in Teams) and generally do nothing that is of any value to us serious business people considering the deal. At the end of the period where we’ve worked our asses of creating possible avenues of value, both the contracts and financial arrangements materialize out of thin air. This is boring paperwork of course, so we keep on joking about the absence of value added and the fact that we pay them hundreds to thousands of euros per hour to get us coffee. (This started out as a cynical post, but this is I think how it is. They add unseen value, transactions are closed without legal and financial snags, and we deal-makers should be thankful for that. You can’t spend a week pissing on commas in a contract if someone hasn’t written it first.)