One of the number one reasons that deals fall apart is because of loss of control over other professionals that are involved in the deal, or the buyer’s/seller’s problems are not being solved in order to finalize the sale.
The more relationships that the broker has with attorneys, CPAs, tax specialists, and lenders, then the fewer problems they will have in that particular deal. I have said it many times that attorneys, CPAs, and lenders kill deals. It is invaluable for a broker to have attorneys that they use to prepare the closing documents and close on the businesses. It is imperative for the broker to have relationships with CPAs that they can refer to first-time buyers in order to assist the buyer in the buying process.
It is also imperative to have relationships with tax specialists to assist with structuring the deal so you can assist the seller in minimizing their tax liability before the business changes hands. If you wait until afterwards to minimize tax liability, then it becomes too late and the seller may decide not to sell if the tax liability is greater than their annual income and the deposit on the business.
If the buyer is obtaining their own specialists and the seller has their own specialists, then the deal will become very chaotic because no one is controlling all the players and keeping them focused on one common goal. My firm has relationships with CPAs and we refer our buyers to them in order to assist them and provide a comfort level regarding evaluations, setting up their business entity, structuring offers, and assisting with due diligence items.
We have law firms that we work with to represent the transaction and prepare closing documents and close on the sale of the business. We also work with all our sellers to minimize their tax liability. The more relationships a M&A advisory firm has, the more control they will maintain over the deal, and their success rate will increase tremendously in their ability to assist you in buying the business of your dreams, solve problems, and ensure a smooth transition.
Do not choose M&A Advisors that tell you that they prepare the closing documents and handle the closing. M&A Advisors are not attorneys and have absolutely no business in preparing closing documents! This is a sure-fire way to give up protection and perhaps get sued. My firm does not prepare any closing documents whatsoever. All closings should be handled by an experienced closing attorney only!
Any professional, experienced business broker should have testimonials and references that you should be able to call. My firm has numerous testimonials. However, please keep in mind that all business sales are confidential and a business broker cannot disclose the information on any sold businesses without the seller’s permission.