In 1998, the trademarked Turner Television Network (TNT) phrase, “Win or Go Home” was first used in advertising promoting the NBA playoffs. This phrase is often used by coaches to describe tournament play in athletic competitions ranging from tennis to basketball. The cold reality of tournament play is that at a given place & time performance needs to be sharp to achieve the desired outcome. Professional sales are the closest approximation of tournament play athletic competition in the business world. Similar to the highest paid professional athletes, individuals that can perform in the pressure and performance assessed environment of sales are rare and frequently rewarded financially.
The sale of privately held companies is one of the most sophisticated “Big Ticket” sales professions an individual can pursue as a career. It is a career that in order to be done well requires experience, knowledge, and a strong, professional skill set. Many business brokerage firms attempt to mitigate the risk of this profession for their firm and employees by charging their customers upfront retainers & administrative fees. This action speaks volumes about their confidence in their ability as sales professionals. A few mergers & acquisitions firms, like IBA, confidently put “their money where their mouth is” and make their compensation contingent on performance and completion of the sale. IBA has been operating under this business model for 42 years in the Pacific Northwest. Personally, I have been at IBA for 23 years (17 years as the company’s CEO & President) and would not operate any other way or hire a business broker that did not believe they would be successful in this compensation model. An owner considering the sale of their privately held company or family business should consider the confidence conveyed and the skill set associated with the two business models employed by the industry when selecting representation.
The following are the characteristics that should be present in the professional sale of a business:
The first component of sales is always strong customer service. In a retail environment, that is conveyed with a smile and a question of “How can I help you?” to every customer that walks in the door. In a business brokerage environment, it is conveyed in an incoming phone call being answered by a “live” person or a timely response to an email inquiry. All incoming calls to IBA are answered by our receptionist during business hours and all phone messages and emails receive responses in a timely manner. This is our protocol whether a seller or buyer contacts our firm. It amazes us the feedback we get, especially from parties interested in buying a business, of unanswered messages or emails that go into a “black hole” at other business brokerage firms. It is our recommendation that you evaluate basic customer service at a firm prior to listing a business for sale. If you as a potential client cannot talk to a “live” person or do not get timely responses to your inquiry then what is your expectation for customer service for parties interested in potentially buying your business from the broker or firm.
Multiple Medium Communications
A business is a sophisticated product to sell with tangible & intangible assets. The best way to sell a business is in a dynamic environment where body language can be read, questions addressed proactively, and communication & negotiations facilitated. This is best achieved in person or on the telephone. It is not a process that easily achieves the best possible outcome when performed virtually. It is the policy at IBA to meet in person with each & every client prior to commencing the sale process to learn about the operations & history of the company, transaction objectives, and to provide a forum to answer any questions that exist about our representation services. It is VERY difficult to achieve the best sale outcome or price for a business without a visual assessment. Business brokers and business appraisers who convey this are naïve about market dynamics. It is our recommendation to anyone interested in engaging a business broker that they meet with them in person prior to paying any fees or signing an agreement. In addition to in person & telephone, communication by email is an important means of conveying information in the sale of a business. It is recommended that parties engaging a business broker assess the quality and context of email communication. A party that cannot draft articulate, grammatically correct email correspondence is likely not the best individual to present a sophisticated product like a business in the best possible light as a salesman. Similarly, a party that uses a personal Gmail email address for correspondence likely is not working for a firm with the infrastructure & resources to properly represent a business.
An important characteristic in the sale of anything is detailed knowledge of its attributes. A waiter that knows every item on the menu and the restaurant’s wine list can guide customers through an enjoyable dining experience. The same is true for a business broker. A business broker should have a good working knowledge of the business operations and assets of a company they are representing for sale. Attributes & knowledge sell a product. In the sale of a business the most important attributes are profitability, industry, and location. Intimate knowledge of those attributes provides a professional salesman with the ability to sell the business opportunity and compare & contrast the attributes with alternative companies for sale. IBA is unique in the business brokerage industry in that it has industry specialists who have accumulated knowledge that allows them to better understand market dynamics relevant to specific industries & market segments. It is never in the best of interest of a business owner to be the “guinea pig” for a broker selling a company for the first time in a specific industry or with attributes they have never addressed in negotiations.
The first three characteristics of the professional sale of a business can be addressed by an individual that is diligent and responsible. It is often said that the last characteristic cannot be taught, it is inherent in people at birth. The ability to close the sale of a sophisticated product like a privately held company requires persuasive & problem solving ability, confidence, knowledge, experience, a willingness to take risks and fail, and relentless pursuit of the desired outcome. It also requires knowledge of accounting & investment principles, contract & business law, real estate, and human psychology. The individuals that have this skill set would likely be successful selling anything. They are the “best of the best” in professional sales. There are few venues where they could earn more by applying their skills. How many professions offer the ability to earn six figures on the completion of one project? It is my recommendation when selecting a business broker that an assessment be conducted on their past performance and ability to persuade you to sign a representation agreement in a competitive marketplace where firms are shopped.
The best product in the world will not sell if no one knows about it and buyers cannot be persuaded to use their money to complete the purchase. A business will NEVER sell itself. It is too sophisticated a product at too high of a price. The best values in the marketplace for privately held companies are achieved in professionally facilitated sales by skilled mergers & acquisitions intermediaries. If you desire to sell a business for the best available price & terms, it is recommended you engage a professional who has the confidence to go to market knowing that they need to “Win” or they will go home with nothing, but their hands in their pockets.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, and mergers & acquisitions community 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”.