A broker is just a middleman between the seller and buyer. What’s the value add for sales like this?
For me, the value of the broker was just someone to guide me through the whole process because I'd never done it before. It was good to have someone whose interests were pretty aligned with mine and who answered questions quickly and thoroughly without me having to pay by the hour.
Another big part of the value was finding the buyer, as I probably couldn't do that on my own. I could have thrown a hail mary and listed the business for sale on the TinyPilot website and my blog, but the person who ultimately acquired the business definitely wouldn't have found me that way.
Having gone through it, I would consider foregoing a broker in the future if I had some way of finding my own buyer, but I have no regrets about the broker for this sale.
In real estate brokers typically get around 2.5%, so even if they find a buyer that is ready to pay 100K more, it's only $2500 extra (so probably $1500 after taxes). It's not a lot of money esp if they can invest that time and energy in parallelizing other deals. Time is of the essence in such transactions.
And then of course a Buyer side agent's incentives are aligned exactly opposite to the buyer, but even if they would want to push for an early transaction above anything else.
But even aside from that, they make more money the larger the deal, so they work to get a good price. They also feel the pain if the deal falls through, so they have incentive to keep the deal alive and both sides happy.
The broker isn't perfectly aligned with me, but of everyone else involved like lawyers, accountants, and the buyer, the broker is by far the most aligned with my interests.
Perhaps so, but you can buy a lot of legal hours with $89,000...
The marketplace connection seems the part that gives the most value.
In this case you have a seller with no experience, and ultimately a buyer with no experience. In either situation a broker is valuable. In the case of both its an enormously important moderator who can keep both parties on track to a successful conclusion.
Book learning in such cases only gets you so far.
Most of this value is in the soft areas, like how hard to push and how to manage expectations with the buyer.
One of the core skills of being a founder is learning when to delegate.
Books tell you what they did in their situation.
They don't tell you what you should do in your situation.
This isn’t AdWords where your landing page sucks, and you can just quickly pivot and get some more traffic. There’s only so many serious buyers of a business like this why risk squandering any of them.
It’s a 15% commission to massively reduce the risk to seller and time commitment. Assuming broker is competent they’re going to get the deal done right. Seems well worth it to me.
He also mentioned having a kid soon, so why drag it out? Dude already made almost a cool million what’s 90k in grand scheme of things to get deal done and money in bank?
Skipping a broker in an extremely high friction transaction is penny wise pound foolish. If residential real estate hasn’t figured out yet how to cut out brokers, business acquisitions definitely have not
If you're already knowledgable, experience, and well-networked, there is less value.
If you're not...well, have you ever sold a business?
Compare the serverCo offer with the final sale. The difference is the value added by the middle man.