“Please put that phone away, I don’t want you taking a picture of me doing this.” The locksmith didn’t seem in a good mood. He was using his considerable skills to pick the lock on my neighbor’s back door. My neighbor had left town earlier that morning. Just before he stepped onto a plane for a flight to the west coast, my neighbor realized he had inadvertently locked his back door and the housekeeper couldn’t get in to let his dog out. He hurriedly called to ask if I could find a locksmith to do the task.
The locksmith was a buttoned-up guy. He had a specific procedure to make sure I was legit. He wanted to make sure I was helping a neighbor, not using a ruse to break into his house. Once the lock was open, the housekeeper walked in, let the dog out, and everything was resolved. I paid the locksmith, knowing my neighbor would reimburse me when he was back in town.
As he was preparing to leave, the locksmith said, “Hey, I’m sorry I barked at you about not taking my picture. I could lose my license if a picture of me doing this got out on social media.” I assured him that was not my intention. I just wanted to send my neighbor a picture of what was happening. But then I asked, “Say what, lose your license? The state of Tennessee licenses locksmiths?” He explained the state-mandated test and application process he had to go through to get and keep his license. He was rightly proud of his work and profession. But later, it occurred to me, the state of Tennessee requires you to have a license to be a locksmith, but has zero requirements to call yourself a business broker. There is no test of knowledge, background check, or standards of ethics to prove you are capable of selling a business. Shocking.
In the face of no state regulation, how does a business owner know if the person who offers to help sell their business knows what they are doing? Here are some questions I’d recommend a business owner ask before retaining a broker:
Can you provide 2 or 3 names of other business owners for whom you’ve worked? Getting references from other owners is a good starting point.
How long have you been brokering businesses? You don’t want a part-timer or somebody who’s just starting out.
Have you handled a business the size of mine? You don’t want a Main Street broker using your business to learn how to sell a big business.
Have you handled deals involving the kind of buyer who is likely to buy my business? If the broker usually works with individuals bringing SBA financing to the table, he/she is the wrong person to start negotiating with corporate or private equity buyers.
How much do you financially need this engagement? This might seem like a crass question, but I’ve seen many situations when the broker needs the deal more than his/her client, and that will always cause a mismatch of objectives.
Next time you lock yourself out of your office or home, be sure the locksmith you call is licensed by the state. But when you’re ready to sell your business, be prepared to ask a lot of hard questions. Don’t be satisfied you have the right person until you have verifiable answers to these questions.
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. https://www.amazon.com/Home-Pros-Guide-Selling-Business/dp/1599329239 . 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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