Don’t Underestimate the Value of Experience When Selecting a Business Broker

Sep 12, 2023

As a college football fan, resident of Seattle, and University of Texas graduate I have been following the career of Steve Sarkisian as both a high performing college quarterback and coach for decades ( https://populartimelines.com/timeline/Steve-Sarkisian).  His athletic skill, intellectual ability to process information, and execute at a high level under pressure were evident at BYU when he led the team to a 14-1 record, was recognized as one of the top quarterbacks in the nation, and beat a highly regarded Texas A&M team (https://theathletic.com/2790618/2021/08/26/how-byu-qb-steve-sarkisian-wrecked-texas-ams-wrecking-crew-for-6-touchdowns-25-years-ago/). A successful business broker, similar to a quarterback, also needs to possess superior skill in terms of processing information, problem solving, and the ability to execute as a negotiator & deal facilitator to get “Win-Win” transactions to successful completion.

The best decisions are made from a foundation of knowledge.  Steve Sarkisian learned the coaching craft as a player and member of the staff from a group of Hall of Fame coaches (Pete Carroll,  Nick Saban, and LaVell Edwards).  This mentorship and support allowed him to achieve high results as a player and assistant coach at USC and Alabama.  Winning national titles at USC and Alabama as a valued contributor to the team.  Most successful business brokers are not lone wolves working at one-man or several person offices, but part of larger entities where even the most intelligent, talented professionals can use senior management and M&A intermediaries as resources for addressing new and unfamiliar transactional situations.  The power of a quality team was also illustrated this year in the blockbuster movie, Oppenheimer (https://youtu.be/uYPbbksJxIg?si=DwfDgY83xql71fYC), where a team of the best and brightest scientists in the nation were necessary to problem solve through and execute a historic scientific achievement.  The exponential value of combining multiple brains should never be discounted when working on sophisticated projects whether they involve the law, medicine, or merger & acquisitions transactions.

Many considered Steve Sarkisian a wunderkind when he was named the head football coach at the University of Washington, and his early achievements included a victory over USC (https://www.espn.com/college-football/recap/_/gameId/302750030), where he had been part of a National Championship winning staff.  However, it is one thing to contribute, and another to lead.  The responsibility and pressure of being at the top of the organizational chart as a leader has crushed many.  When Steve Sarkisian returned to USC as the head coach for the football team, the weight of the position was too much and he departed in disgrace (https://www.seattletimes.com/sports/uw-husky-football/steve-sarkisian-fired-from-usc/#:~:text=Steve%20Sarkisian%20was%20fired%20Monday%20in%20the%20middle,Sunday.%20He%20reportedly%20will%20seek%20treatment%20for%20alcohol.).  Steve Sarkisian had the ability and knowledge to be successful as a head football coach at Washington and USC.  However, he lacked the experience.  Experience can only be gained through doing and living through the good, bad, and ugly of life.  Entrepreneurs selecting a business broker to sell their privately held companies or family businesses should also factor in the level of experience of the intermediary when selecting the person to represent them in a sale.  The last thing desired is someone who escapes into a bottle or throws up their hands when the sledding gets tough on a transaction.

Saturday, as the head coach of the University of Texas football team Steve Sarkisian successfully coached the Longhorns to a road victory over #3 ranked Alabama against Nick Saban (https://apnews.com/article/longhorns-tide-alabama-texas-dbbdf17459d7245c751c759c89cbb938).  As someone who loves a good redemption story, it was wonderful to see a highly skilled, knowledgeable individual now with experience gained through going through a life baptism by fire return to a position where he gets well deserved peer recognition through achievement.  How will he handle the success?  Time will tell.  As an alumni of the University of Texas, it is my hope that he will build on this achievement, for one victory does not make a football season or a hall of fame coaching career.

Selecting a business broker to facilitate the sale of a privately held company or family business should incorporate the same three elements described previously: skill, knowledge, and experience.  Assuming a prudent entrepreneur would only select someone with the knowledge and skill necessary to sell their business, scrutiny should be placed on the experience component.

Experience is relevant in business broker selection in several areas.

  1. Firm Experience – How long has a business brokerage been in business and how many transactions has it successfully facilitated. 2019’s economy was different than 2021 and 2021 from today.  If a business brokerage firm has not been in operation for at least five years, how can they provide the experience necessary to allow for decisions to be made from positions of knowledge. IBA has been in business for 48 years. To the best of my knowledge, it is the only firm in the region that has facilitated transactions at the interest rates presently found in the market.  The best way to gain market knowledge is to complete transactions.  A handful of completed transactions does not create a sufficient data set for comparative analysis for use in business pricing and knowing relevant market dynamics.  IBA has successfully facilitated approximately 4300 transactions since 1975 and annually closes more deals than any other firm in the region.  Finally, successful college football coaches have talented assistant coaches.  Few business brokerage firms have senior management to support their intermediary teams.  IBA has multiple successful business owners on its intermediary team and a VP of Business Development, Curt Maier, who formerly owned his own business brokerage firm before joining IBA (https://www.linkedin.com/in/curtmmaier/).
  2. Broker Experience – Having a quality team behind a business broker provides knowledge & experience to support their intermediary efforts. However, at the end of the day, like when hiring an attorney from a quality firm to go to court, it will be the individual lawyer and not the firm that wins or loses the case. It is prudent to meet in person with a potential broker, assess their communication skills, knowledge, experience, and negotiating ability.  The sale of a business is a sophisticated, nuanced chess game with significant financial implications for the seller.  Playing one game to checkmate victory in 3 – 9 months is much preferred to playing 3 or 4 over a two-year period with multiple losses, if victory at all.
  3. Industry Experience – Each industry has different market conditions and transactional standards. A business brokerage firm should be sought that has had success in the industry of the business being sold.  The industries IBA has successfully sold businesses in can be found in the following section of our website along with specific examples of completed transactions ( https://ibainc.com/industries-served/).  Few firms offer the transparency and track record of success of IBA in the United States.

Where does experience matter?  It matters in problem solving environmental issues associated with real estate.  It matters in addressing inventory issues when items on the balance sheet were bought at inflated values during the COVID-19 pandemic.  It matters when problem solving financing issues to successful funding when banks are rejecting a buyer for a non-substantive reason.  It matters when no middle ground appears to be achievable on legal verbiage for attorneys with dug in positions, but parties who want to complete the transaction.  It matters when the tax implications of a transaction favor one side and not the other.

IBA has successfully facilitated more transactions over a longer time period than any other firm in the Pacific Northwest. We welcome the opportunity to be a resource.  Please contact us whether you want to sell in 2024, 2025, or 2027.  All conversations with IBA are held in strict confidence.  IBA seeks no compensation from clients until the completion of sell-side projects.

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, and accounting communities on subjects relevant to the purchase & sale of privately held companies and family-owned businesses.  IBA is recognized as one of the best business brokerage firms 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”.