Today we're going to chat about business broker psychology and a few tips on how to best work with brokers.

It's no surprise that most folks buy businesses that are represented by business brokers. Engaging a business broker is a great indicator that a seller is serious about exiting. Beyond that, most brokers assist with organizing business documents, handling any due diligence requests, and driving the deal to close. The best ones will even do the hard work of popping the seller's “valuation bubble” and educating them on the process and terms involved with selling a business.

The hardest part of a broker's job is to find an owner willing to sell at a reasonable price and winning the mandate to represent that seller. More often than not, owners are hemming and hawing about selling; have unrealistic price expectations; or already have an exit plan lined up. There are a lot more qualified buyers than there are quality sellers.

It's important to keep this in mind when searching for a business! Many folks will waste time reaching out to brokers to try to build a relationship thinking they'll get early access to dealflow. But, that's rarely how it works!

A broker knows that if they have a good listing, they can throw it on BizBuySell and have over 150 folks reach out (I’m not exaggerating, I used to run a sell-side brokerage). So what does that mean for the searchers who reached out? Well, the broker is probably only going to remember you if he's having trouble moving a listing – which means you probably don't want it either!

So, what do you do? I have two pieces of advice:

Reach out with the most narrow buy-box of all time: Nearly every broker gets dozens of email a month from folks buying a “$1M+ EBITDA, recurring revenue, recession-resistant business with tenured employees in the services industry”. Yeah, that's the least original criteria of all-time! Instead, reach out with a really granular ask that's specific to an industry or a small location. Why does this work? Well, you're helping the broker use you as bait to get a prospective seller signed on!
Fast-follow a BizBuySell inquiry with an email to the listing's broker: They get a ton of inquiries through these listing sites and it’s hard to tell signal from noise. By following up with a hand-crafted note that you’re excited, ready to sign the NDA, etc, you're helping show you're more than a tire kicker!

If you're looking to buy a business, highly recommend you check out our Operator Network. It’s built to provide training and community to the next generation of American owner-operators and help them transact within 12 months.

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