The Value in Using a Local Business Broker

I recently did a search for the Seattle metropolitan area using the phrase Business Brokers on Google to see the organic and pay-per-click results.   Organically, the results produced IBA with our market leading positive reviews (https://ibainc.com/about-iba/google-reviews/).  It produced heritage providers of business brokerage services Transition 360, Exit Equity, and Sound Business Brokers run by people I respect. 

Broker Note: As a business brokerage firm owner I believe in cordial, positive relationships with the other firms serving a marketplace.  A desire should exist at all firms to deliver the highest quality product to customers in the market.  Competition for customers should be on the grounds of why us and not through denigration of another firm.  Consumers should always be provided with choices.  If the founders of Transition 360 (Bill Pearsall), Exit Equity (Dan Gibson), or Sound Business Brokers (Wes Martin) out performed IBA on a given day for a sell side client in the past, I would tip my hat to them, wish them well, and hope they achieved the client’s desired goals. Successful performance by business sale intermediaries is good for the industry in general.

My Google search also produced a number of online business brokerage firms not based in the Pacific Northwest and in many cases not even providing a contact address on their website.  I recommend anyone seeking to hire a business broker to sell their privately held company or family business to start their due diligence by determining where the firm is based.  Reviewing the websites for multiple pay-per-click advertisers online brought to mind the old Pace Picante ad (https://youtu.be/1S828Y7Eais?si=nV3TKxItduH9nSNl) where cowboys on the trail discover their salsa was made in New York City.  Local commerce is good for communities on multiple levels from creating employment to generating tax revenue to support schools and social safety net services.

Many online business brokers offer polished, slick pitches on why they are the best option. Their ability to articulate, educate, and persuade (https://ibainc.com/blog/gregory-kovsky/the-most-important-metric-in-the-selection-of-a-business-broker-to-sell-your-company/) can be strong.

1. Proper Business Valuation – The core calculation in the valuation of a privately held company or family business is EBITDA times a multiple (https://ibainc.com/blog/gregory-kovsky/the-fundamentals-of-business-valuation-ebitda-times-a-multiple/).  The foundation of any analysis is quality data.  If comprehensive, vetted data is used, a good analytical result has the probability of being produced.  One component necessary to properly value a business is knowledge of current market conditions in a specific industry and geographic area.  IBA having successfully sold almost 4400 companies has more transactional knowledge than any other firm in Washington or Oregon.  It should also be noted that most business sales are not recorded in the public domain, so any firm claiming to have a complete data set of completed transactions for an industry or area is being dishonest.   It should also be noted that even when available, unless a transaction was personally facilitated by a firm their knowledge about how the price was arrived at is unknown.  A low price could have been because a person had health issues and a high price could have been because the location was coveted by a strategic buyer (https://ibainc.com/blog/gregory-kovsky/the-five-reasons-sold-comparables-are-problematic-as-a-business-valuation-tool/). It is also common sense that valuation of tangible assets requires in person inspection.  If a simple asset like a delivery vehicle can have a range of values even if it is the same make, model, year, and mileage, all other furniture, fixtures, and equipment can have a range of values as a component of a sale price based on their condition.  If your home needs a new roof, do you seek bids from local companies or nationally?  Would you like to meet with someone who can come out and see your home or someone who tries to do it with Google Maps?   Do you want to use local staff accountable to company ownership or subcontractors that have not been used in the past or will likely be used again?
2. Confidential Marketing – Three criteria will commonly determine whether a buyer acquires a specific company.  They are industry, price, and LOCATION.  The reality is that location matters to business buyers.   This is true whether the buyer is an individual, private equity firm, or publicly traded company.   For individuals, businesses located within an hour drive of their present residence are commonly preferred.  Why?
   1. Commuting is NEVER fun.
   2. An employed spouse is difficult to relocate.
   3. Transferring schools can be traumatic for children.
   4. Our homes are often our serenity sanctuaries filled with memories.

For private equity firms and strategic acquisition corporate buyers, having local infrastructure support makes integration of a new business significantly easier administratively than if executive management and oversight requires getting on a plane.

Local business brokerage firms know the buyers that are active in a local marketplace seeking acquisitions.  IBA has sold businesses in the past to individuals, private equity firms, family offices, corporations, and non-profit organizations based in the Pacific Northwest and externally looking to own a privately held company or family business in Washington or Oregon.   IBA maintains a database of active buyers seeking acquisitions in the markets and industries we serve as business brokers. When a new business comes on the market, the vetted parties in the database program that have executed non disclosure agreements are notified.  In the last two months, four IBA business brokers Andrea Lines (https://www.linkedin.com/in/andrea-lines/), Cameron Johnson (https://www.linkedin.com/in/cameron-johnson-b148219/), Grace Chang (https://www.linkedin.com/in/grace-chang-a0a565281/), and Sally Bergesen ( https://www.linkedin.com/in/sally-bergesen/)

sold businesses to participants in IBA’s Buyer Database Program where the business entered and exited the market in a timely manner and the transaction closed in a matter of months from when it was first listed. IBA only represents sellers.  No other firm, but IBA, has access to our Buyer Database Program.  If your business brokerage firm is located in New Jersey, Texas, or California are you getting exposure to all the buyers seeking acquisitions in the Pacific Northwest?

3. Professional Sales –    People do business with people they know, like, and trust.  For many entrepreneurs, the sale of a business is the sale of their “life work” and involves transitioning valued employees, customers, and vendors.  It is not the sale of a commodity.  Just like it is problematic to value tangible assets without seeing them, it is difficult to assess people without meeting with them in person.   Would you really trust the sale of a “child”, something that people often consider their business, to someone you have never met in person?  Similarly, would you sell your business to someone you have not met in person.  As a general rule, IBA never recommends its clients execute a letter of intent with a buyer until they have met with them in person and the party has visited the business.  In addition, due to confidentiality objectives it is often beneficial to be able to meet offsite during the business purchase & sale process in a location out of view from the public domain.  Selecting a business brokerage firm with physical locations available for meetings is frequently prudent.  Who wants to run into a family member, friend, customer, or competitor when meeting with a potential buyer at a restaurant or Starbucks?
4. Resources – It has often been said “It is not what you know, but who you know” that makes a difference in life.  A resource is not needed until it is needed.  Business purchase & sale transactions require a team of professionals on both sides of the table.   No transaction should be completed by a buyer or seller without consulting an attorney.  It is prudent to engage a state licensed attorney to ensure all relevant law and precedents are taken into consideration in legal documentation.   Similarly, an accountant cognizant of state, county, and municipal taxes associated with operation of a business and its sale should be consulted during the sale process.  As a firm with offices in both Washington and Oregon, I can tell you from firsthand experience that each state has different tax obligations from business owners. Most transactions cannot be completed without financing supporting the acquisition.  Local banks often provide higher customer service and advocacy for loans in their communities than national, virtual financial institutions.  A locally based business broker traditionally has a Rolodex of professionals they can refer.  If an acquisition involves real estate and an environmental inspection of the property is needed, is it better to have a business broker who can get the need addressed in a timely manner by a trusted professional who they have worked with in the past and is familiar with the area, or someone searching Google for someone willing to employ a person they have never met and will likely never use again.  Professionals in IBA’s collaborative partner referral program are held accountable for their performance and only referred again if they met or exceeded expectations in the field.
5. Proper Licensing – Many professions require credentials and certifications to be in compliance with all relevant laws, regulations, and codes. Most businesses are located in spaces that are either owned or leased.  If the sale of real estate in a comprehensive package with a business is desired or a lease assigned as a component of a sale, the business broker employed should have a real estate license that allows for representation of clients in a specific jurisdiction.   If they do not, any negotiations related to leasing or selling real estate has a probability of being in violation of state law.  Some business brokerage firms will “rent” a license to be in compliance, but is that providing a client with the knowledge, experience, and skill they need in the facilitation of that component of the transactions?  I encourage all entrepreneurs selecting a business broker to sell their business to ask themselves, whether they want to take the risk of having future litigation against them because they used an unlicensed broker to do their deal, if all necessary i’s did not get dotted or t’s crossed in the process.  Similar to driving without a seatbelt, it is always better to use a properly licensed and credentialed professional than not.

I personally believe there are many compelling reasons why anyone seeking to sell a privately held company or family business should want to select a locally based firm.  Selecting among the available choices for local representation should be based on their knowledge, experience, skill, customer service, resources, and reputation.  If you are considering the sale of a business, with or without real estate, in Washington or Oregon in 2025, 2026, or 2027, we, at IBA, would welcome the opportunity to share Why IBA?  All conversations with IBA are held in strict confidence.  IBA only seeks compensation on successful project completion.

IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, real estate, legal, accounting, banking, and wealth management communities on subjects relevant to the purchase & sale of privately held companies and family businesses.  IBA is recognized as one of the best business brokerage firmss in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.