Local newspaper readership has been in decline for many years. Today less than 1/3 of the populations in the Seattle, Tacoma, Spokane, and Portland metropolitan areas served by IBA, the largest, oldest, local business brokerage firm in the Pacific Northwest, subscribe to the print or digital versions of their local papers. Currently most people seek their information online from a spectrum of sources, often national in perspective. This is an effective method for gaining international, national, business, sports, and entertainment news about the “movers & shakers” in the world. However, sourcing content in that manner is an ineffective way of staying informed about the local issues facing people & businesses in each community (e.g., changing minimum wages, the high cost of urban housing, conversion from free to paid street parking, road construction, etc.). The informed entrepreneur obtaining and processing this information will identify economic opportunities. The entrepreneur lacking knowledge and/or not taking appropriate action may end up headed down the road to financial difficulty. I strongly recommend all entrepreneurs remain cognizant of what is happening in their community. As the old axiom says, “Those that fail to plan, plan to fail.”
Multiple years ago, IBA, as the Pacific Northwest’s market leader in terms of knowledge & experience in the sale of privately held companies and family owned businesses, identified that one area where quality information was lacking on a regular basis in the Pacific Northwest was related to “best practices” for entrepreneurship and specifically the succession of ownership of privately held companies and family owned businesses. Desiring to address this content void for the good of the small business community, it has professionally served since 1975, IBA collaborated with a large group of experienced, knowledgeable professionals from the local legal, accounting, wealth management, and banking communities and created an information resource with 100’s of substantive articles related to the purchase & sale of a business. New, quality content is added & read weekly by a five-figure readership. If you are thinking about selling your business in 2019 and are inclined to make decisions from a position of knowledge, I encourage you to review content of interest on the following website: https://ibainc.com/blog/
IBA is one of many options for business brokerage services in the Pacific Northwest. We encourage business owners to interview multiple firms when selecting representation.
The following are the reasons, I believe it is prudent for a business owner to focus on hiring a local, experienced, large business brokerage firm, like IBA, to represent them in the sale of their privately held company or family business.
- Local representation has multiple advantages. The first advantage is the ability exists to meet in person with your business broker. This may seem very basic. However, it is not standard practice in the industry. Communication is always strongest in person. If this is your first time selling a business, do you want to obtain life impacting information, make strategic sale decisions, and share confidential information by email, phone, or in person? This is a question all entrepreneurs wishing to sell their businesses should ask themselves. All three communication methods are effective in specific situations. It is my recommendation that a business broker be selected who can communicate in all three methods in a timely manner. It is also advantageous to have a business broker when selling a business who will be present to facilitate all meetings & negotiations in person. It amazes me the number of times I hear about a seller meeting a potential buyer the first time alone without professional representation. You only get one opportunity to make a first impression. It is “best practice” to have a professional intermediary present at all meetings between the seller & buyer to insure information is articulated honestly and in the “best possible light”. In addition, when engaged in negotiations pathways around deal obstacles can often be found by an experienced, professional intermediary by listening to the parties and offering potential solutions from a menu of choices. Depth & knowledge about concerns on both sides of the transaction are best obtained in person.
The second advantage of local representation is the ability to obtain local knowledge related to market conditions. Businesses, like real estate, sell for values based on local conditions. Revenues being equal, a business in Seattle will sell for a different value than one in Portland. Factors impacting the market value of a business will range from buyer demand in a specific geographic area to each state’s tax environments and from local labor & rent rates to customer demographics. Local knowledge is a critical element in the proper valuation of a business. Business brokers not familiar with previous business sales in the area will lack that knowledge and often incorrectly value businesses. An incorrectly valued business will often not sell, sell at a discount, or spend an extended time on the market.
The third advantage of selecting a local business broker is they will have a professional network of local lawyers, CPA’s, bankers, and consultants to refer to assist the parties with the transaction. A business buyer interested in acquiring a company in Poulsbo, Washington relocating from out of state in a transaction facilitated by IBA was recently on the verge of failing to acquire a desired business because her bank declined to fund the acquisition. IBA replaced the bank with another lender we had worked with in the past and the deal was completed in a timely manner. In another transaction, a fleet of vehicles needed to be individually valued to facilitate their transfer through DMV and IBA referred an equipment appraiser familiar with industrial equipment who completed the appraisal and satisfied the government agency’s requirements. These are just two of many examples of local professionals needed to successfully facilitate transactions. Failure to employ a business broker with an established network of experienced, knowledgeable professionals has the potential to jeopardize a transaction. It takes decades and 100’s of successfully facilitated transactions for a business brokerage firm to build a quality network of referral partners.
- There is no replacement for knowledge & experience. IBA has facilitated over 4000 transactions in the Pacific Northwest since 1975. Our business brokers have deep local, transactional, & industry specific knowledge. The industries where IBA provides professional representation are conveyed on the following webpage: https://ibainc.com/industries-served/
The depth of our relevant knowledge is conveyed in the large number of articles IBA has contributed to its blog. It is my strong recommendation that a business broker be selected for professional representation that has relevant industry experience. It is very different to sell a restaurant versus a manufacturing company making aerospace parts. It is also important to have representation who has been through the process and has relevant knowledge & experience to convey related to “best & standard” practices related to the sale of a privately held company or family owned business.
- There are many boutique business brokerage firms in the Pacific Northwest with 1 – 4 business brokers on staff. These individuals often do a good job representing their clients. They also commonly have bandwidth and resource issues where they need to prioritize their clients based on time & economic constraints. It is my recommendation that a business broker be asked questions related to the number of businesses they are presently representing, the number they sold in the last year, and what resources will be expended on behalf of their client to sell a business during the interview process. Many business brokerage firms collect retainers and administrative fees up front to start the sale process. This is commonly employed by firms without the resources and financial strength to represent and market their clients effectively. No business owner wants to have a broker that employs a less than robust marketing plan to advertise their business and generate potential buyers or is living month to month off of administrative fees and retainers trying to survive in the sophisticated, nuanced world of mergers & acquisitions, where only the “best of the best” business brokers survive in this primarily performance compensated industry long term. IBA, with its double-digit team of business brokers, employs a performance-based business model where 100% of our compensation is paid by our clients upon completion of the transaction. We complete 3 – 7 transactions a month as a firm. In 2018, our transaction values ranged from six to eight figures.
The second reason a business owner should desire representation from a large business brokerage firm is to have a depth of knowledge & experience to assist with the sale of their business. I have been a mergers & acquisitions intermediary with IBA since 1994, and the President & CEO of the firm since 2000. All IBA’s business brokers have individual knowledge & experience competitive with everyone else serving our marketplace based on the training they have received, and their experience & knowledge gained in the field facilitating transactions. They also have numerous professional colleagues at IBA they can use as resources to discuss and problem solve through situations in the “best interest” of their clients. The value of this resource should not be discounted. Several local firms, including Transition 360 and KR Business Brokers, had highly respected, knowledgeable founding owners leave the firms recently. It will be interesting to see in 2019 how their BIG shoes are filled in terms of knowledge, experience, and professional skill set. I will personally miss my friendly, professional relationships with Bill Pearsall and Kirk Edwards in the future. I always knew business owners were in experienced hands when they were representing them in a business sale. Quality, knowledgeable representation by all members of the business brokerage community is in the best interest of all firms. I hope each & every firm in the Pacific Northwest that successfully facilitated a transaction in 2018 achieved their business goals and had a group of satisfied clients willing to refer their services to friends and family in the future.
Many services experience diminished quality when local providers disappear. This is true for local news and business brokerage. IBA is proud to be the oldest business brokerage firm in the Pacific Northwest. 2019 will be our 44th year serving this marketplace. We anticipate being around for another 44 years. Contact IBA when considering hiring local.
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”.