There was a stat the other day showing that less than 20% of the deals consummated on the show “Shark Tank” ever get finalized. That statistic is consistent with the business brokerage stats as well. Less than 20% of the deals that go to Market ever sell and less than 50% of deals that are contracted ever close.
One of the reasons for this is the proverbial “expert” . Just this morning I got an email from a Real Estate Broker who told me he had analyzed a listing and decided that it was overpriced and that it was worth half of the asking price based on his valuation and analysis. Early in my career this would have bothered me some but the older I get the more attuned to static noise I am.
Lets take this mornings circumstance:
1. It is not the job of a broker or an agent to provide analysis (fiduciary analysis) the legal ramifications of such activity is deep and broad…..but if you want to swim in those waters have at it Nemo.
2. There are many valuation methods and frankly an analysis based on one sheet of paper is not a very deep one? Given the 7 accepted methods of valuation in business sales one must wonder about the depth of knowledge of the chosen advisor in this case.
3. The sales skills of the broker in question to blast away with a statement like that in an email having never met his opponent is certainly in doubt.
Anyway, part of the precarious nature of business sales and purchases is that the principals should and often do rely on advisors. The question is what do they know, are they qualified, and do they possess proven acumen in the field they are engaged.
So, I ask you to please choose your advisor wisely…they can help, hinder, or derail your intended pursuit