Lance Hood:               Richard you have 18 questions that people need to ask their brokers. Can you share three of the most important ones with us?

Richard Parker:           Sure. I mean the first one is easy. "How do you work with buyers?" Some of them actually shun them. I mean I've had people tell me, "Buyers are liars. We don't work with buyers." I still don't understand that because I don't care how good a business is you can't sell it unless you have a buyer. So how do you work with buyers? And do you have any buyer clients? Or can you walk me through the process of how you work with a buyer?

                                    Next, ask them if they co-broker deals or they simply sell their own listings? If they do cooperate with other brokers ask them if they'll bring you businesses to review or do you have to go online or make inquiries and then tell them about that particular business and contact the other party on your behalf? So again, do they co-broker, and depending on whether or not they do or don't how do they work within that environment?  

                                    And next ask them, "Of all your closed deals," and this is very important, "What is the typical deal structure of your deals?" And they may tell you that, "Oh they're all different."

But here's what we're trying to get at. You want to really find out for the most part are most of their deals all cash, are they third-party financing, or are they seller financing? And the reason why you want to know that is because if the brokers tell you that have a high percentage of seller financing they've properly prepared their sellers, or have done a real good job selling if you will a deal to their clients. So they've really demonstrated the ability to get deals done.

                                    A broker who tells you, "Most of my deals are all cash." You know what? They're full of crap because that doesn't happen. The ones who tell you, "Well most of my deals are third-party financing through the bank." Well, they're equally full of crap because only 6% of all deals happen that way. So the guy who tells you that, "Most of my deals there's some element of seller financing, or creative financing, or creative deal structure," they're the ones you know that A; they're not lying. They're clearly telling the truth. B; they understand that every deal is unique and that they have to work the deal and you've got to massage it like clay to make it happen. And the third thing is it tells you that they're capable of doing that and they've prepared their seller more than likely or at least they're capable of presenting a case to their seller who may have gone into this thinking, "Oh someone's going to walk in here and write me a big fat check for blah, blah, blah millions of dollars. And I'm going to sail off into the sunset or in my RV with my wife." Right? And they've explained to them that the deal takes it's own life and they have to be open minded to deal structure depending on the buyer.

                                    So those are few a ways that you could identify a good potential broker.

Lance Hood:               Many people complain about business brokers. Why is that?

Richard Parker:           My first answer is because they deserve it. Most business brokers have never owned a business and so they really can't effectively package it because what people expect who are buying a business is to have a business broker who is able to present the business to them effectively. And very often they just simply don't take the time to package their business properly as their agenda is not the same as one would hope from a buyer's perspective. And they really don't see the deal though the eyes of the buyer. Because they haven't gone through the process themselves they, it's not their money, it's not their future on the line. You meet some business brokers say, "Look I'm not going to give you any financials on the business until you present an offer." I mean how crazy is that?

                                    They also take on way too many listings. It's the whole industry of business brokerage and I often refer it to as "business brokenage." It's really steeped in legacy. They've been doing the same thing year after year after year for 20, 30, 40, or 50 years which is, "Let's carry X amount of listings. It'll lead to Y amount of sales, and Z amount of money." And no one sort of challenges the status quo of what it is that you need to be to improve those statistics. Instead of just challenging that they just keep doing the same thing over and over again. And I'm a firm a believer that no matter how hard you try if you keep doing the same things over and over and over again don't expect different results. It's impossible.

                                    The other thing is business brokers themselves confuse their role. A lot of them think that they're salesmen but they're not. A good broker knows that you can't convince or pressure someone to buy a business. There's just too much at stake. And so every buyer really had an entourage of advisers from lawyers to accountants to their mother-in-law. And everyone is critic and can find a reason for you not to buy a business and really the most important thing is family members especially don't want you to get hurt.

                                    A good broker understands that he or she is really - they're a facilitator. They're not a salesperson. The ones that try to sell you really could not care less whether or not you buy the right the business. They just want you to buy any business.

And it's funny because one of the first things a well seasoned but really tainted and only marginally successful business broker told me when I went into the field was, "Never go visit the business after you sold it." I mean, isn't that amazing? Never go visit the business after you sold it. They were afraid to see the buyer. They didn't want to know the carnage that they caused. They just didn't want responsibly.

                                    I look at that and say, "I think that's completely ridiculous." Every single one of my buyer or seller clients have become personal friends during and long after the deal was done. And I'm not trying to position myself as better than anybody else or in the brokerage field because the truth of the matter is there are lots of terrific brokers, but there's many, many more that are rotten. But that sentence that that gentleman told me sort of conveys what they're perception of the role is. Sort of, "Long as this guy buys a business I don't care what business he buys. And once my commission check clears it's sort of out the door, see no more."

                                    That in itself is fundamentally flawed so people to understand that's what they're dealing with in most cases.

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