What Differentiates “Introducers” from M&A Advisors?

M&A advisorsSadly, the average business broker (the “introducer”) has an abysmal closing success rate of less than 10%. How is this possible, you may ask? It’s possible because typical business brokers do not take the time to do three critical things:

  1. Understand their client’s business and the opportunities that it provides for potential buyers;
  2. Prepare comprehensive and complete information packages that accurately and favorably represent their client’s business
  3. Market effectively to a broad base of buyers.

Instead, these brokers focus on seller volume; they engage every possible seller, notify their buyer network, introduce prospective buyers and sellers, and then hope that it works out and that they will get a check at the closing table.

Why would they do this? First, it’s the “easy” way. They do not have to do much work, just sign up new clients and send their financials to their buyer network.  And secondly and unfortunately, the math can work out in their favor. If an average success fee is $75,000, the “introducer” can make $75,000 – $150,000 / year with one or two “lucky” closings out of 20-25 clients.

Calder Capital does NOT work this way. We are not gamblers, especially with something as important as a business transition! We take on every sell-side engagement with a conviction that our client genuinely wants to sell and we proceed to pull out all the stops to ensure the best possible outcome for our client.

How do we do it? We utilize a number of strategies simultaneously.

Buyer Recruiting:

We recruit buyers and add them to our distribution network every single day. Here are typical places we find new buyers:

  • Personal and professional connections – We meet with and talk to new buyers on the phone every week.
  • LinkedIn – We connect with buyers and professional advisors actively on LinkedIn.com every week.
  • Our website – www.caldergr.com is highly ranked for “business brokers” and “businesses for sale” on Google. On an average week, we receive numerous notification list sign ups.
  • Paid-for business-for-sale marketing websites – We are paid members of sites like these, for example bizbuysell.com, where buyers search for new opportunities. Every time we receive a buyer inquiry, that buyer’s information is stored in our CRM and they are notified of future opportunities.
  • Strategic buyer research – We research companies that operate in the space of our clients and confidentially reach out to the owners of those companies.

Buyer Screening:

  • Confidentiality is key. Our confidentiality agreement is air-tight and electronically signed / authenticated by buyers. No buyer sees any confidential information without submitting a signed confidentiality agreement.
  • Buyer qualification. It comes down to wasting time; we don’t want to waste ours, yours or theirs, so we make sure to ask buyers qualification questions such as:
  1. Have you ever purchased a business?
  2. What is your level of available capital?
  3. How soon do you want to acquire a business?
  4. How long have you been trying to acquire a business?

Professional Materials:

  • In order to sell your company for the highest possible profit, we need to know you and your company and be able to tell your story in the best light possible. Prior to going to market, we conduct a 1.5-2 hour interview with you. During that interview we walk through a comprehensive questionnaire. We then produce a 20-30 page Confidential Information Memorandum (CIM). This CIM is used to tell your story to prospective buyers after they have signed a confidentiality agreement.
  • Our CPA-licensed team of financial analysts analyzes and compiles a comprehensive Financial Addendum. This document is easily dissected by prospective buyers and their advisors so that they can quickly and accurately understand the historical financial performance of your company.

Why does all of this matter?

Quite frankly, if we have 20 clients, we want 20 sales! Our goal is to facilitate a favorable transaction. In order to ensure that we bring the best possible offer to our client, we need to make sure that our confidential marketing efforts are as broad as possible and that they materials we disseminate to buyers are comprehensive and professional so that buyers can quickly and efficiently understand your company.

On a typical engagement:

  • Our client’s business will be confidentially marketed to 10,000s via our website, business-for-sale listing sites, emails/calls to our professional network of 20,000+ contacts, and directly to strategic buyers (companies and private equity groups).
  • 50-100 buyers will request information.
  • 30-50 will sign our NDA and be interviewed.
  • 10-15 will request an introduction or showing.
  • 1-5 will submit offers.
  • 2 of those offers will be in line or better than our expectations.
  • We will be able to leverage buyer competition to bring our client the best possible price and terms.

It’s necessary to have exposure to tens of thousands of potential buyers to get the best offer for a business from two or three of them. We have seen that ourselves and know it to be true. With each of our successful transactions, this process is tested, refined, improved,  and continues to produce the best possible result that the market will bear for our client at that time.

This is why Calder Capital is the preferred business broker for any owner who is serious about selling a business and wants to see an efficient and profitable sale within a reasonable amount of time. If you are interested in that kind of outcome, don’t hesitate to contact Calder. We would be glad to further discuss our process and what we can do to help you leverage your investment into a successful sale.

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Calder Capital, LLC