Are Business Brokers Required to Share All Submitted LOI's With Sellers?

May 30, 2024

by a searcher from Duke University in Chapel Hill, NC, USA

I have run into a situation where I and a broker at a small firm got off on the wrong foot. Despite letters of support from multiple banks they, for whatever reason, don't consider me a capable buyer. And they will not share my questions or interest with their seller; much less arrange a management meeting. The deal has promise and I at least want to get in front of the seller.

My question: are business brokers generally required by their contract with the seller to share all submitted IOI's / LOI's with their clients? Or do they have discretion to decide what to share with them?

The idea being to submit an Indicator of Interest based on the public info just so that I can get in front of the seller.

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Reply by a professional
in New York, NY, USA

Frankly speaking, no the broker isn't required to share all LOI's with the seller. The broker is here to field the intricacies of the selling process so the seller can continue to focus on the business or their personal life. One of the worst things you can do is to get off on the wrong foot; most brokers have their selected candidates that they would like to present in front of the seller. By not getting along with the broker, who most of the time is the seller's agent could not sit well with the seller, also take precaution about going directly through the seller, depending on the agreement that's in place with the seller, you may have no other choice but to deal with the broker. Also, if you are dealing with the seller directly it may not be as easy as you think, many sellers rely on the broker to coach them through the sale and avoid cold feet and also put them in hot seat to make a decision. Besides prolonging the process. Regardless of the route you choose, there's a social side to the business. People should believe, like and trust you.

Reply by an intermediary
from Southern Methodist University in Dallas, TX, USA

Business brokers are generally subject to few standards, with only a few states having licensing requirements unless when real estate is involved. There is no requirement to share all offers, and brokers are not fiduciaries. Frankly, letters of support have limited value, so I can see why he may discount your ability to close.

Personally, I think it is appropriate to summarize all interested parties to the buyer, discussing the merits of each offer, as it will help the buyer understand there is a real market. that the broker process is working and he is getting the best, well-rounded offer,

I expect the broker to believe there are more qualified buyers or buyers with higher-valued offers. I would expect the broker to have exclusivity, so if you approach the seller directly he should forward your offer to the broker, but at least the buyer would be aware of its existence. If you go that route, I certainly would not mention any friction with the broker.

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