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Is there any Moral code or Standard that a Broker should have whenit comes to working with a potential buyer

Do most business brokers adhere to any standard of common courtesy when dealing with potential buyers ?
I was working with a broker for 9 months or so in regard to purchasing this business. We had met 3 times in person and kept in contact thru text and emails. I felt price the seller wanted was high and I had made an offer which was more in line with what I felt value was and then broker did not even tell the seller to counter the offer work a deal. Over the course of the next few months the broker did talk seller into reducing asking price twice and last time he reduced it I said lets meet again and planned on raising my initial offer. The day we were to meet,broker contacted me less than hour before and said during that afternoon another person who had asked about the business that prior week had thrown out a verbal offer and the seller accepted it that afternoon. I felt broker should have courtesy to tell me another person was making offer and ask me for mine also.

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Answers (3)
Brig Burton
The 363 Group
Maricopa County, AZ

Jason, there are very FEW brokers out there that truly represent buyers exclusively. Most will offer to co-broke with other brokers. Their fees are still tied to your paying top dollar for the business - their interests are not aligned with you as the buyer. My advise is to find a broker that has successfully bought, fixed, and sold at least a half a dozen companies himself to represent you and help you buy the right business for you. Better to pay a bit in the form of a retainer / hourly fee than to have the choice of a lifetime compromised by misaligned motives (via the typical co-broker fee that most brokers hold to).

Call me if I can help - I work exclusively with buyers through all phases of the business buying process, and have bought several companies of my own. 480-359-6983 or email: brigburton@363peg.com

May 1, 2013
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The BAF Group LLC
MD

Jason, you may also want to read our blog, which has a post that specifically describes the Broker relationship, in more detail: http://combrokerbusiness.wordpress.com/2012/02/09/who-does-a-business-broker-represent/

Apr 26, 2013
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The BAF Group LLC
MD

There are a lot of questions I would pose to you, if we were able to speak to eachother. And there is a real danger in my passing judgement without knowing all of the facts. I can tell you that, as a Broker, there is no way in the World I would have accepted any offer that was purely "verbal". That is the kiss of death in doing deals, as far as I am concerned. Did the Broker do anything WRONG, in what you said? Not that I can tell. As you imply in your text, the Broker, in this case works for the Seller. If the Seller says, "Do the deal," as a Broker you do the deal! If the Seller likes both the price and the terms - and the terms may be a big part of any deal - then he has the right to accept that deal immediately, regardless of what the Broker advises. For example, if the other Buyer could settle in ten days and the Seller knows you would need thirty, he may have taken a quick deal, rather than trying to negotiate simply a higher price. That is not to say that this was what occured; it is an example of what can occur.

If the Broker did anything specifically wrong, it MAY be in not encouraging his Seller to renegotiate with you, if he thought there was merit. If all other terms were equal, he possibly should have said to the Seller, "Okay, now that we have one offer in our hand, let's see if Jason wants to up his offer." But that is between him and his Seller, which is his Client. Sadly, he really did not owe you anything as I understand the circumstances you paint.

This is a painful lesson for most Buyers: Unless the Broker specifically tells you IN WRITING that he is working for you (the Buyer,) you must assume that he is working for the Seller. If you are paying the Broker, you should have a written agreement that specifically states he is working for you. I am working with a Buyer right now, with whom I have become good friends. There are times when he crosses the line and either tells me too much about his particular strategies, or leans too much on me for advice. I have to continually remind him that I represent the Seller and that we have a written document that attests to that relationship.

Ethically, I do not believe the Broker with which you were dealing did anything incorrectly.

Apr 26, 2013