Business Broker Bulletin™

Welcome to your monthly Newsletter about Business Brokerage.

When the Vendor doesn’t want to pay for advertising, is it worth listing the business?

This is a very controversial issue. Different business brokers have different views. Let me present my view.

Yes, it’s worth it, but not in all cases.

The broker must use some discretion in judging the situation. Let’s give 3 scenarios.

It is an amazing business, it’s at a fair priced and full commission. Give me one reason why you would refuse such a listing. Even if we all have advertising expenses including the preparation of the information memorandum, are you telling me that you prefer to lose a listing of 600,000 x 8% = 48,000 because the Vendor doesn’t want to pay 1,2 or $3000 of advertising?

Scenario 2-  It’s an average business, nothing major, the price is not the best, it’s all a little bit salty but it is still a commercial listing. Then we must ask what moment in the market moment are you in? Are your flooded with businesses and this one will not add anything to your listings (you have plenty of similar businesses). In that case, maybe it isn’t worth it. It will depend on the balance of the listings you have.

Scenario 3 – The business is performing poorly, but the owner insists in selling for a price that you understand will be very difficult to achieve. Tell me, for what reason will you spend time (and money) picking up that business?

Most of the discussions between brokers revolve around the first case where they just don’t list the business if there’s no payment of the added fee.

I can certainly understand the logic behind this, although, I believe that from a commercial stand point, it is a decision that throughout the year produces LESS INCOME. We are in the industry to make a profit, aren’t we?

The important thing is to make a thorough and full assessment of the business that you’re talking about!

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