Mitch Biggs is a Featured Business & Finance Contributor to Associated Content. This is a reprint of a published article.
The perfect business for you is probably not officially on the market. If you are serious about acquiring a business you should strongly consider retaining a business broker to represent your interest on the buy side. How does buy-side brokering work? Buy Side Business Brokerage is when a qualified buyer decides to allow a professional find companies that meet their buying criteria. The broker and the buyer enter a contract whereby the buyer pays the commission rather than the seller. Most buy side brokerage agreements will also include a retainer fee for the business broker.
The buyer and the broker discuss the attributes the business should have. Examples of these attributes are:
1. Geographic Location
2. Price Range
4. Life cycle of the business
5. Buyer’s role after acquisition
Once the opportunity has been defined properly, the business broker can then seek out companies that are not yet on the market. Informing business owners that all commissions are paid by the buyer open a lot of doors. The business broker meticulously searches companies and reports back monthly to the buyer with results of the search and potential candidates.
Although retainer fees are typically not refundable, it is a recommended best practice to ask the business broker to subtract the retainer fee from the commission during closing. A good business broker will aggressively find a business for the buyer that has retained their services. In fact, finding a business for the buyer is the last thing the broker thinks about before they go to sleep and the first thing they think of when they wake up.
There is no reason to spend hours sorting through online sites for a viable business. Hire a professional business broker to go find the perfect business for you before it is officially listed on the market.
Business brokers have an extensive network of contacts, they can personally target companies that meet the buyer’s criteria and use an effective target mail marketing program that will get the attention of the decision makers.
The best way to buy a business is to hire a personal shopper. Once a month you simply review the portfolio of companies that meet your criteria. By giving the keys to a business broker with a buy-side agreement, you will unlock doors that you did not realize would open. In the long run it will save time, money and transform a frustrating experience into a very lucrative endeavor.