"QUALIFIED BUYERS ONLY - NO SEARCH FUNDS"

searcher profile

August 25, 2021

by a searcher in Austin, TX, USA

Take a look underneath the business description header:

https://www.bizbuysell.com/Business-Opportunity/leading-a-v-systems-design-integration-production-and-rental-company/###-###-#### /?d=L3RleGFzL3RyYXZpcy1jb3VudHktYnVzaW5lc3Nlcy1mb3Itc2FsZS8yP3E9YkhROU16QXNOREFzT0RBJTNE

I've had several professionals discourage me from using anything related to the term "search" whenever I talk to a broker. I'm not technically a search fund so it doesn't matter to me but I'm surprised at the amount of pushback that searchers seem to be getting from some in the intermediary community. Do they not understand the model? Are they trying to avoid sophisticated buyers? Do they think the deals are too messy? Why no love?

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commentor profile
Reply by a searcher
from Babson College in Boston, MA, USA
Some brokers will also not like your nose or ears. It happens. This is a numbers game. Don't worry about this broker in particular, but focus on the general situation....if you could show a checking account statement for the full EV of the business for sale, the broker would have no issue in terms of your capacity to transact. So what to do? (1) Get a letter of support from a debt provider. (2) Get a letter of support from investors who will state that they will support your acquisition if you bring them a deal that meets their criteria within the time period they want to invest. Place this criteria on your website, but not in the letter of support (don't pin your investors down###-###-#### Don't contact brokers about specific deals at first....contact them about your criteria. Tell them who you are, who supports you, and what you're looking for before discussing a deal. The broker will likely tell you about deals he/she has that fit your criteria. "Pre-qual" yourself with Brokers. They should become part of your network before you engage about a deal. Use online website to find brokers, not deals. Brokers have deals that aren't online yet. If you work well with a few brokers, then they can vouch for you with other brokers who are skeptical. Deal fairly with all brokers because you always want them to bring you a new deal and you always want them to be on your side. If you do what you say, and don't waste peoples time, and explain why to choose to pass on a given deal, you will be much better off. The "search world" dumps on brokers too often...this post is just an example of "what goes around comes around" for us. Treat brokers the way you'd want to be treated if you had to close 2-3 deals per year to feed your kids.
commentor profile
Reply by a lender
from Northwestern University in Chicago, IL, USA
Not a broker, but as a lender, I have relationships with numerous brokers, investment bankers, and other M&A intermediaries.

Some don't understand the search fund model or don't believe in it. They don't think that relatively young, highly-educated, and well paid professionals can adjust to work life that's not a "cushy" 9-5 corporate job. Obviously as a business owner, you wear all the hats. Brokers get a lot of interest on their engagements, much of it unqualified, so naturally the experienced ones usually take a cautious, even skeptical, approach when dealing with potential buyers.

Along the same lines, I've had a few brokers get frustrated with searchers looking to do forensic audits, as part of due diligence, on businesses with enterprise values of $1-3 million. Besides time and cost, forensic audits can feel intrusive for sellers (keep in mind, brokers usually work for sellers, not buyers). It doesn't help that with most small and lower middle market businesses, financial record-keeping and controls can be quite messy.

With all that being said, my bank is able to provide searchers with "Pre-Approval Letters" for business financing (after reviewing some basic personal documents). With this in hand, brokers and sellers are usually more receptive, willing to negotiate, and motivated to get a deal done. Not surprisingly, having a bank involved in the process early-on makes a huge positive impression on the other side.

For any searchers that believe they can benefit from a pre-approval, feel free to reach out to me directly-- redacted or###-###-#### .
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