Currently the supply of businesses available for sale is being driven by a large demographic shift: the Baby Boomers are transitioning into retirement age and making arrangements for their next stage in life. In order to make these sales happen, there must be more business brokers in the market as well. However, business brokers are aging as well, and the ones with experience will run out of capacity and not be able to adequately service growing demand.
There is a steep learning curve to becoming a business broker. The only way to learn the trade is by shadowing existing brokers, and many of these are retirement age or older and do not wish to train replacements. Therefore, it will be virtually impossible for business broker supply to meet seller demand, particularly as demand accelerates. However, lead by a desire for high commissions, more unqualified, inexperienced business brokers will emerge charging high retainers and not having a solid understanding of how to source buyers or complete transactions. For business owners, this may result in an extended time period of years before they can successfully sell their companies, or worse, it will result in thousands of owners having to liquidate them, leaving employees, customers and legacies devastated.
Many Main Street business brokers active in the market right now are “introducers” rather than brokers. They have a network of buyers and often do limited marketing such as calling other brokers or advertising on Craigslist. If someone in their network is interested, they will coordinate an initial meeting and often do nothing else to follow up or close the sale afterwards. This is not how Small Business Deal Advisors approaches the brokering of our clients’ largest investments. In essence, we are offering Main Street broker services with much more aggressive buyer marketing and much lower commissions.