Expert Answer

Lance Hood:               Someone might think that's it best to hand over the negotiations to an attorney or a business broker because they do this all the time, and it would be easy to assume that they would do a better job than the average person. What do you think?

Richard Parker:           Let me try to draw an analogy for you. I have four kids. Getting an attorney to do your negotiations would be the same thing as me taking my six year old son, giving him a book a matches and a can of gasoline and telling him to "go play". You've got to be out of your mind to hand over your negotiations to an attorney or a business broker.

                                    A business broker for sure and for certainly especially from the buy side, because business brokers don't represent buyers, they represent sellers of the deals, number one. Number two, most of them have never even owned a business before.

                                    And the third thing is their agenda is not whether or not you buy the right business, they just want you to buy any business. So a business broker is completely out of the equation.

                                    As far as attorneys are concerned I'm not as hard on them as I am on brokers but I have pretty rigid opinions about them. You absolutely need to have an attorney on your side to do the transaction, but they're related to the contract. Attorneys don't negotiate deals. Attorneys typically have the problem of either wanting to be right or trying to prove how smart they are. And it's not they're money at stake.

                                    So from the core issues related to the transaction, you got to deal with the seller. Now there could be through an intermediary like a broker, but the actual negotiating, deciding what your position is, et cetera, I mean the more that you can negotiate directly the seller the better off you're going to be, and no other party's going to care about your money as much as you do.

                                    Now there are situations where there are specific legal issues for example, where your attorney and the seller's attorney have to work to reach an agreement between themselves, and that's done at that level. There are certain issues where your accountant and their accountant need to agree on certain issues. There's some allocations of the purchase price and the actual contract that have to be negotiated, and that's best done between the professionals.

                                    But handing it over to someone else is completely ridiculous. That would - and again, I use the example of the gasoline and the matches, or telling, someone to withdrawal all your money from the bank and drive up to the first stranger you see and say, "Do me a favor, here's $25,000, could you hold this for me for a week? I'll be back." I mean that's what it's like. It's completely ridiculous.

Lance Hood:               You know that's just like when the government got caught buying $700 hammers.

Richard Parker:           Right.

Lance Hood:               Whenever someone else is in charge of your money they'll never care as much about where the final dollar amount lands as you would, because they're not stuck on the hook for paying for it. And at some point anyone you hire will just want to get everything over with so they can get paid.

Richard Parker:           Yeah, I mean it's exactly - and so it's just like the members of congress. I love the argument that's always made that, "Let's withdraw their pension. They have to go on Social Security, and I can guarantee they'll figure out a way to make it work."

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