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Never Use a Business Broker

“I would never use a business broker, even if I was giving my business away.” Harold (not his real name) did not know I was a business broker. I met him going through the buffet line at a recent civic club meeting in Nashville. Once we got our food, we sat down to eat. We had about 15 minutes to chat before the program was scheduled to start.

The discussion eventually turned to that obvious question, “So, tell me, what do you do?” I told Harold I was a business consultant. He, in turn, told me he owned a business that distributed plumbing parts throughout several southern states. Then he added, “I’m ready to sell the business, since both my kids have decided they’d rather be doctors than business owners.”

I asked Harold if he was going to use a broker to sell his business. That’s when he gave me his opinion of brokers. I assume somewhere along the way he had a bad experience with a business broker. I then told Harold that, although I was an attorney, I didn’t practice law anymore, but instead focused on the intermediary work of helping owners sell their business. I said, “Harold, I am what you might call a business broker, though I sure hope your opinion of me would be better than what you seem to have for all other business brokers.”

He replied, “Oh, Jim, I am sorry, I shouldn’t have been so blunt. My wife tells me that gets me in trouble sometimes.” “No offense taken,” I said to Harold, “based on what I’ve seen over the years, your opinion of business brokers is not too far from accurate.

I have to admit, it’s kind of uncomfortable to call yourself a “business broker” when the very image of that role is negative with most business owners. There are many reasons business brokers generally have a bad reputation. We’d probably rank below Congress in a popularity contest. But instead of running from the role, I embrace it fully knowing I add value to a business owner selling his/her business or to an investor looking to acquire a business. I help my clients understand the strategy for making their decision, and help my clients navigate the treacherous waters that lie between a decision and the result. That approach is miles ahead of how most brokers work. You know the type, they take a “for sale” listing, then post it online hoping to stumble across a buyer.

Harold asked me to call him in mid-November to talk about selling his business. Whether he wants a broker and whether he’ll need to use me are questions still to be answered. But at the very least, I hope Harold knows not all business brokers are the same.

JIM CUMBEE is President of Tennessee Valley Group, Inc. a retainer-based business brokerage and transition mediation firm in Franklin, TN. Cumbee is an attorney and has an MBA from Harvard Business School. Jim is the author of Home Run, A Pro’s Guide to Selling a Business. .  He has a wide range of corporate and entrepreneurial experiences that make him one of the most sought-after business transition advisors in the state of Tennessee. The story above is true, but the names and fact patterns above have been changed to preserve the parties’ identities.

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Tennessee Valley Group

Jim is an attorney (non-resident status with the Missouri Bar) and though he no longer practices law, he has read and negotiated enough legal documents to fill a cargo tanker. He has an MBA from Harvard Business School and knows how Wall Street and private equity operates. Jim is a Tennessee Supreme Court Rule 31 listed general civil mediator with tons of experience helping business owners (large and small) work through sensitive problems to achieve winning results. He is the author of "Home Run, A Pro's Guide to Selling Your Business, Seven Principles to Make Your Company Irresistible."

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