Not everyone starts from the same place when buying a business. Some folks have been around and understand a little bit of the game. They have talked to a few brokers, maybe see a few information memos even spoken to a seller or a bank or two. Yet, as I continue to find out when talking to clients, I encounter many who haven’t been out there at all and simply do not know where to start. This is what happens when you have been working a
job too long. And this takes some time on the
“street” (read unemployed) to actually have the time
to learn some things about the outside world. That said, people have jobs and so time is limited and the learning process is thus tedious. That’s why I’m here. Talking to brokers isn’t easy if you have not done it before. They can be intimidating because they ask all the obnoxious questions that you don’t want to answer. Like “how much money do you have”? Or “how many companies have you bought?” I don’t like to answer that one. Even if I owned five companies it’s like “why don’t you own ten?” The simple motivation is that brokers do not want to be embarassed by their buyers. So there is a screening process but the good news is there are always ways around it. Over the years I have been able to get a look at every size deal even though I didn’t have a prayer of buying the bigger ones. I recall working through an investment banker to get hooked up with a big Textile company, a couple hundred million in sales. The vetting process was quite thorough but our undercapitalized investor group was, for a while at least, the frontrunner. Other deals in the $30-$50 Million sales are in industries ranging from manufacturing to oil wells were similarly easy to get a look at. Which is not say we bought all the companies but that the screening process wasn’t really screening anybody at all, even at high sales levels. The moral of the story is that brokers generally need to give all reasonably credible buyers the opportunity (no matter their resources) to look at their deals. So new buyers need to start with this fact in mind. You WILL be able to get by the broker screening process and get plugged into deals both big and small. You just need to push a few of the right buttons, talk at the broker
for a bit and you generally get look at just about any deal you want. It won’t happen day one but over time you will have enough discussions under the belt to build up great relationships with brokers so that they send you a consistent flow of deals.