Doing Good Deals with Bad Brokers | Clint Fiore

Clint: So, yeah, my name is Clint. I'm gonna talk about, how to do good deals with bad brokers. I wanna I wanna hear a raise hand or see a raise hand if if you've ever encountered a bad broker. Okay. Any of you ever encountered a good broker that was helpful?

Alright. Less hands, but they're they're here. Okay. So that kind of proves my point. Like, I I have a limited amount of time.

I have a lot to say, but the 80 20 rule kind of applies here. The difference is, you know, like, like, if you're trying to sell a house, you know there's everybody you know, there's hundreds and hundreds of realtors, but there's a small percentage that do high volume and really know what they're doing, and there's a lot of others that are less quality. And, this applies to any market where there's brokers. There's kind of like 80% making a mess and 20% that are driving the bus and getting a whole lot done. And, the problem is is when you're shopping for a business, you don't encounter you know, you may talk to 1 or 2, and you're only 1 or 2 you've talked to were in that 80% of bad ones, and it makes you think they're all bad, but they're not all bad.

So I'll get into that. But, this is me. I'm in the business business. I have a company called Bison Business. This is all I've been doing the last 8 years is helping people buy and sell companies, done sell side advisory, now buy side advisory, and then I also have a team that works with me and that I oversee their their pipeline of deals.

I, this is this is how broke how attorneys think of business brokers. This is a meme that, this is a meme that Eric, S and B attorney, posted when I first got onto Twitter. The year of our lord, 2022. And I clap back with this one. This is how I think of attorneys.

Sorry, bankers, if you're there's a banker in the room that sucks. This is the real me though. Like, I'm a family guy. I'm a small business guy and my small business happens to be a business brokerage. I really believe that our businesses should serve our lives, and that when you're buying companies and doing these things, it should be to build the dream life that you want, and it should serve others and make the world a better place and and employees a better place.

And I really believe in the heart of all this and think that if you all do a great job, we can change the world for the better. I don't have time to talk about that today but that's my favorite topic is just talking about my family, flying, and lifestyle design via small business. But, let me before I get into the bad broker part, I want to talk about the attributes of good brokers. So for those of you that raise your hand and have encountered good brokers, the best ones in the industry, they make your deals go really smooth. Nothing ever goes really smooth, but more smooth than than for sale by owners that don't know what they're doing.

But they set real ex realistic expectations. The most valuable thing I think I do on a day to day basis is pop the valuation bubble of owners. They come to us with extremely sky high expectations and and a good broker can kind of bring them back down to Earth and tether them to realistic expectations. They we can influence and persuade the seller. When their attorney digs in on something stupid that is gonna kill your deal, we can be that voice of reason saying, hey, I know I'm on your side here, but the buyer's never gonna go for that, and you've gotta get realistic.

And and usually, there's nobody kinda being that voice of reason unless it's a skilled intermediary, Persuasive. So we can drive the process, crack the whip, get it done, solve problems, every deal tries to fall apart. If you've done deals like LOI to closing is I think where we earn our money because every deal tries to go off the tracks 10 times. And a huge part of our job is just putting the putting the dang train back on the tracks after it derails. And when a broker is not involved, a lot of times, it just can't get done.

It just it just goes off and stays off. Get you diligence stuff and even help you with it, and help you secure financing. And I've had so many times where I'm engaged sell side, and by the end of the engagement, the seller pretty much hates me, and the buyer loves me, and the seller's saying things like, I thought you worked for me. Like, what are you doing? Like like and it's because, like, I've spent the last 2 months just hold up with the buyer, helping them get through underwriting, helping them get through due diligence, helping them get their 3rd bank after their first two banks said no, and, and solving their issues.

And I have to tell the seller, you know, like, I do work for you, but ultimately, this buyer's writing the check that's gonna pay you and gonna pay me, and I have to make sure they get they get this deal done. This is the IBBA, the International Business Brokers Association. This is the Chairman's Circle Award winners. I wanted to show you that, like, I'm not the only good broker. There's a bunch of bunch of us out there that are kind of, I'd say, the 20 percenters, moving a lot of volume.

And and so this is kind of I'm friends with a lot of these folks. The attributes of great brokers if you want to, like, find great brokers, some of the things you should look for, and I would I would encourage you to, like, look for these attributes and go to them first for on market deals because, they're gonna have better stuff. So look for all these crazy letters. I connect it I collect, letters behind my name like they're Infinity Stones, because I don't know why, but I do it. I think there's a sweet spot of about 4 to 12 deals.

So if you go to a broker's website, then you see, like, a 100 deals on it or 50 deals on it, like, you're you're often not gonna get very good service. And if you see like 1 or 2, you're often not going to get very good service or have someone that's a serious deal maker. But I think that there's kind of a sweet spot. Most of the high performance brokers don't take on many more than 10 at a time, but they also have more than 2. They're not a business broker and, so I think the best brokers out there are focused on M and A.

They're not, they're not doing consulting and brokerage or accounting and brokerage or real estate and There's a lot of the ands out there. And they have a staff. So they may have an office, and their phone gets answered even when so, like, my phone should be getting answered today, while I'm here talking with you. So that's the good brokers, but here's some myths. And here's here's the meat of, like, what I think is really going to help you guys is, I like to promote good brokers.

I like to encourage this industry to get better. But the fact of the matter is, is there are a lot of low performers out there, and they do get good listings. And so good companies do get in the hands of the 80% low performance brokers. And I think that I would love to give you all some tips today about like what do you do in that situation and how do you, kind of overcome that and win the deal. Because it actually can be to your advantage sometimes.

So, a bad broker is often, they don't have a very good buyer network. They're not very good at marketing. Their deals might sit longer. You may think that like, this is a bad deal because it's set for a while or because it's got this joker representing it. But business owners, they don't know the difference between good and bad brokers most of the time.

If they're a charismatic person and they can sell them on and and present well, they can get the listing even if they don't know how to do a good job with it. So, let's get into the broker. This is the the fun part is the sucky broker stereotypes. And, we're gonna learn about the various types of of bad brokers and then kinda how to how to deal with them. So the old guy that never calls me back, this was the guy I I, I learned from originally and that decide that made me decide to, not that guy, but you know, someone like him, that made me decide to go independent.

There's a guy in his seventies that was kind enough to, like, take me under his wing and explain to me how the world worked to business brokerage and wanted to make me his partner and successor. And then when I saw how his processes worked and all this, I I just decided I I don't wanna continue this. I wanna I wanna do something different, A little more high-tech, a little bit more, whatever. So trying to do things better. But there the attributes of this guy, there's a lot of them like it, is they're hard to reach, but they're kind of okay when you get them.

So, like, they kinda been around enough that they know what they're talking about most of the time. But they're terrible with technology. They're set in their ways. Then they think freshly minted NBA searchers are the devil. And they think that you're a bunch of say this in the searcher community.

They think you have no money. Like, you think you're an idiot that that thinks, that yeah. They kind of have a chip on their shoulder about MBA communities and and the kids coming out of b school. Even if you've got every attribute of a good buyer, they're skeptical. The the ways to deal with them is, a, be the squeaky wheel.

So you may have to reach out 5 times to their one and, but they're like like this guy, their love language is obedience. So, like, they have no obligation to get back to you. But if they need something from you, they want it right now. And it's just like really crazy double standard. But this the person that I was learning from when he was explaining to me, like, okay, he would put a deal on BizBuySell and then I'm like, why has this business not sold?

It's been on here for 6 months. Like, what's going on? Why is it not sold? And he goes, tire kickers. I go, what?

What's tire kicker? What does that mean? Tire kickers. How do you know these are tire kickers? Like, has anyone like, what's your process?

Has anyone filled out the, like, contact me form, my BizBuySell? And he's like, oh, yeah. Every day. Every day I get those. How many did you get?

I've got over 200 of those on this one business. Well, why hasn't it sold? They're all tire kickers. And I'm like, okay. Well, how do you define a tire kicker?

What does this even mean? And and I and he finally explained his process. He sent an email, a template email to all 200 of them. Attached to it was like a 6 page thing that he wanted you to sign and scan and send back to him, including a detailed personal financial statement, etcetera, etcetera, and and nobody was doing it, you know. And so his his philosophy was he didn't have enough time to chase down all these 200 people, figure out who's real.

The one that climbs that high fence he puts up, does things his way, is gonna be the one that gets this deal. And that's how he filters and he doesn't have a team to filter. He doesn't have time. And so that's what he does. I picked up the phone as an experiment because I was young and dumb and didn't know what I was doing, and I wanted and I called this list of 200 from BizBuySell.

I was, like, print it out. I'm gonna call them all. And they were not tire kickers. They were, like, good buyers, but they just weren't, like they they would say things like, I don't know. I I looked at 10 deals that day, and this guy sent me this thing.

And I don't even know if I really liked it that much, so I just ignored it, you know. And but they were serious buyers. So obey what they want you to do, and you may find out of that 200, you know, that didn't do what they wanted, you can be the one that did get the deal. Flash them cash. So that's the main thing they think is that everybody's broke, everybody's tire kickers.

Show them that you've got financial, capabilities to do this deal and get them in person or on phone ASAP because they will not be impressed by your website, your resume, or anything else, but if you can get them face to face and build rapport with them, you can that can go a long way. So this is kind of my, my playbook to deal with the old guy that doesn't call you back. Okay. The Mc broker. Okay.

So, we got this guy, key attributes, Too many listings. All moderately overpriced. They're really thin on information. Generally have no idea what they're doing. And they're playing a numbers game.

And they're often a franchise broker, but not the owner. I I wanna be careful here because I have friends that are franchise brokers that are really good. They're some of the top brokers in the country. But most of the big franchises, Transworld, VR, Sunbelt, Murphy, you name it, like, they will sell any one of franchise. And they don't know who's gonna be successful, who's gonna take it seriously, and who's who's won.

So there's a lot of bad franchisees and there's even worse people working for bad bad franchisees. But there's some great ones out there. So my big advice when it comes to franchise brokers is to not throw the baby out with the bathwater because there are great ones out there. But they're recruiting nonstop. They're putting out like cheesy ads to come work for my brokerage, and they get anybody with any sales background in the door, and they're trying to do deals, but they don't know what they're doing.

They're often really green trying to work a bunch of really marginal small deals. Okay? So the Mc broker, the way to overcome them is to follow the process then escalate. So many times, the green brokers at least franchise brokerages, they have an owner that owns the brokers that knows 10 times more than they do, that if you get in a bind, you can escalate up, call the franchise owner and, they can help you out sometimes when the rookie broker can't. Speak Main Street.

So don't try to teach them what networking capital or capex is, okay? So this is a the old guy that doesn't call you back, sometimes he understands this stuff, but the McBroker usually doesn't. And most of you in this room, I think, are the more advanced type of buyers. Like, if you're up against a Mc broker and you got a deal that you want, just structure your deal in a way that they're going to understand. They want it they want you to write an offer that's cash free, debt free.

You're not taking the owner's cash. You can get inventory in your deal, but don't use the words working capital. Just just say the things you're trying to buy and how much are you gonna pay for it. Itemize those out and, like, that's your offer. But don't don't use formulas.

Don't don't settle up on on working capital at the end of the deal. Structure it really simply, and don't try to teach them. The big the big theme here that's gonna apply to all these situations is it's not your freaking job to fix business brokers. What's your job? Buy a good company.

You know, like like and I had a a mentor that told me this, and I've said it a 1000000 times. I'll keep saying it. It's like, do you wanna be right or do you wanna be rich? I was the guy that always wanted to be right and would shoot myself in the foot to prove how freaking smart I was and how dumb everyone else was and it makes no one like you. No one wants to work with you.

No one wants to do deals with you. You'll get a lot further in your pursuit of great companies if people like you. And so this is about pragmatism. This is about understanding who the players are, learning to speak their language, so you can be front of the line, preferred candidate, and even the bad brokers have heavy sway over who the seller chooses to get to buy the business. So this is what this is all about.

Keep this simple and structure, I mentioned that, and move quickly. They they like I think they make brokers thrive on, like, getting a bunch of small deals done quick, and it's it's like a volume. And if you're a fast mover and you're responsive and you're using their templates when you can, if it like and that's another thing, templates. They'll send you templates. Some of the brokers do it all the time for all kinds of stuff.

Like, they'll they'll love you if you use their template. If there's one thing on there you really hate, scratch it out, initial it, but send it back to them, and they'll like that better if you use their stuff. Okay? The the all the franchises provide a bunch of templates and they like to use them. There's the real estate broker that dabbles in m and a.

This one is getting worse and worse, guys, because the real estate market is pretty much frozen right now. And this is a beast that is growing rapidly encroaching on our turf here. They key attributes is there they they say real estate on their website and their business cards and stuff. They put the business on LoopNet. I know LoopNet's owned by the same people that own BizBuySell, but people will put, like this person will put like an actual photo of the business on LoopNet.

Like blow confidentiality left and right because they don't, That's what they're used to with the real estate. They'll get all the financial terminology wrong. Their their Sims will be detailed about like photos and physical attributes of the business, like, real estate offerings, but no none of the stuff you really need. Like, you're gonna decide really quick based on EBITDA. Right?

Like, what's what's in your buy box, but they don't know what EBITDA is. They can't spell it. So there's no financial recast. They're obscenely mispriced most of the time, and it can be either direction. Okay?

And they hate LOIs. They think they could wipe their butt with an LOI and that would be more valuable than your LOI. Like, they think that's not a real offer because they're from a world of contracts, right? And, and so, this is increasing more and more. You're getting, real estate and commercial real estate and residential real estate people that are trying to sell businesses.

So the way you overcome them is, make an offer. So they don't even want you to meet the seller most of the time. They're like, they wanna send you the thing and get an offer. Because that's what they're used to. So, make an offer, but give yourself outs.

Okay? Money talks to these people and get to a contract they recognize as quickly as possible. Again, have your attorney, if it's a real estate person, put a contract in front of them that looks vaguely like a real estate contract, but give yourself the outs that you need for due diligence and financial approval and the windows. But just just they're gonna if you send them that and then all these other buyers send them a typical LOI, they're gonna look at your offer and be like, man, this one's serious. It's got like $10,000 of earnest money in it or escrow or, like, who cares?

Like, as long as you put it somewhere where you can get it back, like, if you do what you gotta do, get it done. This is the fun one. It's, like, once you get an offer accepted and you get into due diligence, just take over the process. They cannot help you from here. All they care about is, like, they can see their commission coming.

They want they've done the math. Right? And and, like, but you've gotta get financials and get to the get through diligence. So take over the process. They will let you because they're lazy and they don't know what they're doing.

Okay? I've got 1 minute left. So I'll buzz through one last one. But but on all these, be respectful. Don't try to dunk on them.

They're they're proud people and that will backfire. Alright? So this is how you work for them. And there's one worse. I'll I'll wrap up with this one.

Stay away from these guys. There's a few that, I would consider them predators that like they make all their money really off of like upfront fees. And if you've been around the block, you probably know who this is. There's like 2 huge shops that are very bad. The way you deal with the predatory shops is you generally try to avoid them.

Come back in a year or 3, because they won't sell it. Try to get the seller's info and circle back to the seller later. Make friends with their closer. They usually have one that does close the small amount of deals they close. And like I said, circle back to the sellers.

While I'm up here, somebody in the back, will you snap a picture so I can prove I was here? You got me? Thank you. Last time I spoke, I never did that. But, yeah, this is me.

I'm gonna turn it back over because we have another awesome speaker. I wish we had more time together, but let's hang out more. I love you. I see so many good friends here, and I'm just glad to be here. Thank you so much.

This transcript was generated with Transistor AI