We're getting ready to list our company and I've been talking to a few brokers. What keeps coming up for me is that I don't want to just see a spreadsheet of offers. I want to look someone in the eye and see how they talk about their own plans. We've built this thing over 18 years and the idea of handing it to someone I've met once in a conference room bothers me. Am I overthinking this? Curious if others have felt the same and decided to deal direct instead of going through the usual process.
Selling
Why dealing direct gives you a better feel for the buyer
Not overthinking. I sold my HVAC business two years ago. The broker brought me three buyers. The one who closed was the one I had lunch with twice before we even talked numbers. You learn more in twenty minutes of unscripted conversation than in a full data room.
What specifically do you think you learn from being direct?
Whether they talk about the business like a spreadsheet or like a place where people work. I know that sounds soft. But the guy who bought mine asked about our two longest-tenured techs by name before he asked about margins. That told me more than any LOI.
We went through a broker for a reason and I'd do it again. Not because I didn't care about fit, but because I didn't trust myself to separate a good salesman from a good buyer. Direct dealing cuts out the person whose job is to pressure-test that.
How do you handle the initial vetting if you go direct? Most of the people who approached us unsoli cited were not serious. A few were just fishing for our customer list.
That's fair. I didn't take unsolicited calls. I went to three people I already had some history wwith, or who came recommended by people I trusted. It wasn't an open process.
The fishing thing worries me too. We had a guy last year who wanted to 'explore synergies' and spent the whole meeting asking about our top five accounts. No offer ever came.
Dealing direct means you're the one who has to have the hard conversation when the buyer starts lowballing. And they will. A broker absorbs some of that friction so you don't burn the relationship before it starts.
Do you think a broker woultd have caught the customer-list guy earlier?
Maybe. Or maybe not. Brokers get played too. But they see more patterns than you do. That's the whole point of paying them.
I've bought two small companies directly from the owners. From my side, the direct conversation was the reason I felt comfortable. I could ask dumb questions without a banker rolling his eyes. I could tell the seller I wasn't going to gut thee staff. That matters to some sellers., But I'm not the guy with the highest offer, usually.
That's the the tradeoff. Direct dealing is better for feel. Sometimes worse for price.
Only sometimes. I've seen brokers bring in buyers who are just collecting comps for another deal. A direct buyer is usually a direct buyer.
The customer-list thing still sits with me. I tihnk what I'm hearing is that direct is not the problem, the problem is being sloppy about who gets access. That's on me, not on the process.
Yeah. And one more thing. The direct buyer sees you, not the broker's summary of you. If you're the one who built the place, that's an asset. Some buyers pay for that.