Listed my commercial cleaning company with a broker last year. Six months, three showings, one lowball offer. Paid a $500 upfront fee and got nothing but a glossy PDF. What I learned: don't assume a broker has buyers just because they have a website. Ask for proof of active buyers in your industry and a list of deals they closed in the last 18 months. I'm now talking directly to two competitors who actually know the space. Has anyone else been burned like this?
Brokers
What my failed broker experience taught me about finding buyers
Brokers are middlemen with a CRM and a logo. Most of them just post on BizBuySell and wait. If they can't tell you exactly which buyers they've spoken to about your business, walk.
Ouch. $500 isn't terrible compared to some. I paid a 10% success fee to a guy who literally emailed three people and and then ghosted me for two months.
Did you check their license? Some states require brokers to be registered. Might give you leverage if they lied about hav ing buyers.
This is why I'm considering just selling to my employees via a small seller note. Broker fees are absurd for a business under $2M.
No license required in my state for M&A brokers, only real estate. So that avenue is dead. The employee route is interesting but my crew can't raise the down payment.
i had the opposite experience. My broker was great but I was unrealistic about valuation. He told me 3.2x and I insisted on 4.5x. Sat for a year. Went back to him, listed at 3.1x, sold in 4 months. The lesson might be that brokerrs are only as good as your own expectations.
that's fair, but the broker should still be able to show you buyers, not just tell you your price is wrong.
SkepticalSue is right though. Half the people complaining about brokers are the same ones who think their 10-year-old van and a mop bucket is worth a million dollars.
Sure, but OP's broker charged an upfront fee and delivered nothing. That's a completely different problem than overpricing.
Anyone else notice how many "brokers" are actually just business coaches who pivoted during COVID? They have no buyer network, just a Canva template and a dream.
The Canva template thing is painfully accurate. Mine had a "confidential information memorandum" that was just my intake form with stock photos of handshakes.
Okay that's actually hilarious. And sad. I will say though, my broker never charged upfront. Only success fee. That's the only model I'd ever consider now.
Upfront fees on a listing are a red flag. If they believed they could sell it, they'd take the risk.
What if you just tried to find a buyer through your industry association or trade shows? Cheaper than a broker and you meet actual operators.
That's basically where I'm at now. Two local competitors reached out after I posted on our regional cleaning owners Facebook group. We'll see. Not holding my breath.