Attorneys, we need to let you in on some things that hurt us to share.
Business brokers tend to give you a bad rap. They say you freak out sellers, scare off buyers, and blow up deals. We don’t think that, but in seeing both sides, we can understand why some might. Even so, we know your hearts are in the right place. Here’s some perspective that we hope will unify attorneys and brokers for successful outcomes with mutual clients:
Transactional vs. Transitional
An attorney views a business sale as a transaction, while a business owner sees it as a transition. Your view isn’t wrong. In fact, we specifically want a transaction attorney. But realize that the owner is in the midst of closing one chapter of their lives and starting another. It’s a business sale, yes—and it’s also the culmination of a life journey. Your ability to recognize and respect the transitional aspect will help you articulate concerns from a position of risk vs. reward rather than fight or flight.
The Broker’s Role
While brokers think attorneys blow up deals, attorneys often assume brokers are only in it for the commission. In any profession, there are bad apples. Some brokers might indeed be focused on their own payday. However, the broker’s true role in its purest form is simply to help the owner sell the business. The broker should get a commission for facilitating the sale, not facilitate the sale to get a commission. Integrity matters.
Offense and Defense
The broker wants to help the client sell the business successfully—and so do you as the attorney. We both want the same thing, but we have different responsibilities. The broker is trying to score for the seller. The attorney is trying to keep others from scoring on the seller. The broker is on offense and the attorney is on defense. We’re both on the seller’s team. It’s not an individual sport, nor is it a battle royale, and we’re not against each other.
Recommendations vs. Red Flags
During the sale and approaching the transition, the client is in a state of fear. Feeding that fear muddles the transaction with emotion and hurts the person we’re both trying to help. When you’re pointing out unfavorable or questionable terms in a contract, try to slow things down and explain the ramifications. With every red flag, give a recommendation along with other options and potential impacts that the seller should consider.
Collaboration Is Crucial
Business brokers cannot give legal advice. We really—legally—need an attorney in the transaction to sell a business. We also need a CPA, financial planner, and investment banker to round out the seller’s team and be on the same page throughout the sale.
The onus isn’t all on attorneys to adapt and adjust to brokers. We all need to know our roles, respect each other, and work as one in the best interests of the owner. Besides, the WIN is more rewarding when we achieve it together.
By John Ovrom, President & CEO, Exit Consulting Group