Contacting sellers of brokered companies directly

searcher profile

May 18, 2021

by a searcher from Northwestern University - Kellogg School of Management in Philadelphia, PA, USA

Does anyone have experience with contacting sellers of brokered companies directly? The broker is very encouraging when we do speak that I am the front runner and the seller really wants to sell to me, but is also extremely slow to respond and full of excuses why he is not getting me the information needed (after he says he will). I am considering reaching out to the sellers directly, not in an attempt to cut the broker out, but rather to see if I can move this along which I believe to be in all our best interests. What do you think?

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Reply by an intermediary
from Wake Forest University in Winston-Salem, NC, USA
Agree with several of the above (^redacted‌, ^redacted‌, ^redacted‌, ^redacted‌):
1. Check your NDA/CA, you could be in violation by contacting the seller directly. And even if not a written requirement, not good form, but... (see #2)
2. Ask for the broker to set up a conference call with all three of you to check in on the timeline, to-do items, expected turn times, etc.. This will also give you a sense of the seller's motivation. They may just be overwhelmed at this point (due diligence, particularly if on the longer list side of things, can wear out a seller while they are also trying to run the business). Corralary - always good for personal reflection: are the buyer requests clear, concise, need to have items easily obtained, or long, unorganized, curiosity items that are hard to put together and really don't impact the go/no go decision?
3. It may not be the broker, they may be waiting on the seller or the seller's CPA for information, but like a good broker, they are taking the heat and not throwing their client under the bus.
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Reply by a professional
from Southern New Hampshire University in Boston Metropolitan Area, USA
Unfortunately, it is easy for the broker to "blame the seller: their client" for being too busy. Time kills all deals and it is incumbent that the broker be immediately responsive to the buyer. Rationalizations such as these are why the business brokering industry is sometimes viewed as less than stellar. Our philosophy is to engage the Seller and Buyer early on in the process. These are the people whose lives will be directly impacted by the sale and will likely be working together through the transition process (at a minimum) and may be tied together for years if there is 'seller-paper'. Any deal points or legal commitments will be flushed out in the P&S agreement. Coaching the Seller to be cautious of what they say and always leaving out clauses such as "before I can commit to anything, I'll have to have a discussion with my broker, or business attorney, etc. The traditional small business brokering model is outdated. While my comments may be viewed by fellow brokers as unfair, I believe there is basis for my assertions. To be most fair, there are a lot of responsible, caring and responsive brokers out there, who manage deal flow expeditiously and are in front of buyer inquiries. Great question anonymous! It has stirred up some lively responses. Good health to all!
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