Broker relationship where the broker truly works for the buyer?
October 26, 2024
by a searcher from Harvard University - Harvard Business School in Houston, TX, USA
Most brokers work for the seller - listing the business for them and getting paid only when a deal happens, meaning they are incentivized to help convince the buyer to buy. Same with real estate, investment banking, etc. Are there "buyside" brokers who search for the right type of business for a specific buyer and take a fee/payment directly from the buyer? Or any other setup where the broker truly works for you instead of the seller?
from Massachusetts Institute of Technology in Woodstock, GA, USA
As a general rule, we would never accept a search fund as a retainer. Remember, you are competing with much large and more active PE funds and family offices. They are better candidates for retained search as they have higher likelihood to close. What a buy side firm gives up in a retained search is right of first refusal - to offer that to a search fund means the IB / broker may be tying up a deal with a buyer that is less likely to close.
I’m sure there are some brokers that would be happy to take your money, but I would be very careful to make sure they aren’t remarketing deals to you and that you’re only paying for their proprietary efforts.
from Bentley College in Miami, FL, USA
First, there are M&A advisors or deal coaches that can help you with vetting, modeling, deal structure, financing, valuation, LOI, etc. This is something that we see quite often at DueDilio and have many of these types of professionals in our network.
It sounds to me like your question is more in terms of deal sourcing so I think you're talking about a deal origination firm. There are many of these types of firms and the typical fee can be $300 to $5,000 per month. A lot of times, this doesn't make sense for searchers because the deals are too small or the budget just can't support this type of assistance. Plus - consider that a vast majority of deals are brokered.