Business Brokering Buy Sell Business – Worldwide Business Brokers

Selling a Business: Why Deals Don’t Close – Pt 3, 3rd Parties


Selling a Business: Why Deals Don’t Close – Pt 3, Third Parties

01 May 2023: Selling a Business: Why Deals Don’t Close – Pt 3, Third Parties

Two weeks ago we posted Part 1 of this series on why deals don’t close when selling a business. In the that post, we focused on complications and obstacles created by the seller. Last week, in Part 2 of this 3-part series on selling a business, we discussed some of the problems created by buyers that cause deals to collapse. This week our topic is the mischief that can be caused by some of the third parties in the deal.

When selling a business, whether with the help of a professional business broker (recommended) or when a business owner is attempting a FSBO (decidedly NOT recommended), third parties will almost always be involved. (I say “almost” always because we’re aware of a couple of transfers of smaller businesses that were done without any professionals, all of which ended poorly.)


We offer a comprehensive coaching program  – both group coaching in our Brokers’ Roundtable℠ community as well as one-on-one coaching – tailored to Realtors, business owners, buyers and anyone interested in valuing, buying or selling a business.

If you’d like to learn more, email me at jo*@Wo*******************.com


The most commonly involved third parties include a broker, a lender and one or two attorneys. But very often the transaction also includes an accountant or two, a financial planner, a trust specialist (if a Deferred Sale Trust is being used to defer or reduce capital gains taxes) and in certain situations a divorce attorney will be involved. Each of these players can throw the proverbial monkey wrench into the deal.

A post to discuss all the potential pitfalls that could be generated by each of these players would be ridiculously long for a casual read so we’re going to focus on the three main culprits: the broker, the lender and the attorneys.

The Broker

Because there is no official business broker license, nearly anyone can claim to be a business broker. Many people do. Few are.

Yes, there is a license required in far too many jurisdictions to sell a business but that license has nothing to do with selling businesses; nothing. It requires no instruction on how to value businesses, no training in marketing businesses for sale, no guidance on how to get deals financed and zero counsel on how to get deals closed. Many of you worthy subscribers know that the license I’m referring to is a real estate license. (To get the list of U.S. and Canadian jurisdictions that require a person brokering the sale of businesses to be licensed, enter your name and email address below and it will land in your inbox a few minutes later.)

Now, given the requirement of holding a real estate sales person’s license, there is, not surprisingly, no small amount of irony in the fact that the biggest “broker” problems we’ve seen surface over the years is when a seller hires a real estate agent to sell their business.

Now, I have nothing against real estate agents per se – except the ones that purport to know what they certainly don’t know; such as selling HIMARS missile systems to the military, enterprise software to businesses, corporate bonds to pension funds or private businesses to buyers of any kind. But that demonstrable lack of knowledge does not for a moment dissuade quite a large percentage of real estate agents from giving it “the old college try”. Well, maybe not the HIMARS systems, enterprise software or corporate bonds. But for some unknown reason, many of them appear to think that selling a business is a walk in the park – until they try it, that is.

We’ve been contacted so often by real estate agents asking for our help that our flagship Course, “Learn How to Value and SUCCESSFULLY Sell Businesses“™ was developed with them in mind.


Our course, “Learn How to Value and SUCCESSFULLY Sell Businesses, teaches you how to accurately value and successfully sell businesses.


As with Realtors, I have nothing against attorneys, per se, but you have to have the right kind of attorney to successfully complete a transaction where the parties to the deal are, if not deliriously happy (impossible), at least satisfied.

Firstly, you have to find what is referred to as a transaction attorney; one that specializes in getting deals done. One experienced in negotiating deals, not divorces or zoning issues. Avoid your brother-in-law the ambulance chaser or your niece that specializes in closing the sale of houses.

Secondly, you want an attorney that knows that the objective is to get a deal done. There are attorneys out there who seem to look for ways to kill deals rather than look for ways to remove obstacles and get across the finish line. Transaction attorneys generally understand how to move the ball down the field. They’ve done this before.

If you’re buying or selling a franchised business, make sure a franchise attorney is part of the team, even if only in a consulting capacity. (We’re in the process of scheduling a live Q&A with a franchise attorney. Join The Brokers Roundtableand you’ll get a notice when that’s on the calendar.)


Some lenders are generally interested in getting deals done but most conventional lenders are extremely conservative and few like lending for the acquisition of a business – unless the borrower doesn’t need to borrow, of course.

But there are lenders out there that specialize in lending for business acquisitions. In fact, we’re interviewing one on The Brokers Roundtable℠ later this month. Alex Goss with Live Oak Bank will be our guest for a live interview and Q&A that you can join.

(The Brokers Roundtable℠, an online community created and hosted by Worldwide Business Brokers, has a live interview with Alex Goss, of Live Oak Bank scheduled for late May. At the conclusion of that discussion there will be a Q&A during which attendees can get their financing questions answered by a pro. But you’ve got to be a member to attend. You can sign up for The Brokers Roundtable℠ here.)

Having the right lender – one experienced in financing business acquisitions – can make all the difference in getting deals done.

Like transaction attorneys, they’ve been here before. They know how to structure the paperwork to satisfy the underwriters. They know what buttons to push to keep the process from stalling out. Most of them are particularly adept at guiding the buyer. And given that the acquisition of a business is rarely done more than once in a lifetime, having a lender who understands the process is invaluable.

Many conventional lenders, on the other hand, are more comfortable with car or boat loans. They generally feel better if they know where the asset is and can seize it if problems arise. But they realize that selling a car or boat that they’ve repossessed in relatively routine. Selling a business is anything but.

The Bottom Line

Each of the parties to a deal can derail that deal at various points in the process. Hiring a professional business broker – someone experienced in herding all the cats involved – is arguably the most important first step to take when selling a business.

Professional business brokers can generally tell when any of the other players are acting in a way that can potentially run the deal into a ditch. They have a sense of whether the attorney or lender is the right one for the job. They can usually tell when the buyer starts blowing smoke. And they can call out the seller – our own clients – when he or she is causing the problem.

If you’re a business owner without the experience of selling a couple of businesses, make sure you’ve got the right talent onboard when it’s time to sell yours.

If you’re a real estate agent, I urge you to consider that taking an assignment to sell a business is likely in contravention to your fiduciary duty to the client – as clearly defined in the NAR’s Code of Ethics & Standards of Practice; i.e., to act in the best interest of your client. If you’re not trained in valuing and selling businesses do one of two things: 1) refer the seller to a professional business broker that is trained to sell businesses – thereby earning a handsome referral fee – a move that is clearly in the best interest of the client or; 2) get trained. We can help.

I’d like to hear from you. What topics would you like me to cover? How can we tailor these posts to be more useful to you and your business. Let me know in the comments box, below, or email me at jo*@Wo*******************.com.

If you have any questions or comments on this topic – or any topic related to business – I’d like to hear from you. Put them in the comments box below. Start the conversation and I’ll get back to you with answers or my own comments. If I get enough on one topic, I’ll address them in a future post or podcast.

I’ll be back with you again next Monday. In the meantime, I hope you have a safe and profitable week.


Searching For…

This week we were contacted by a U.S.-based private equity from looking for opportunities in B2B services, particularly facility services. They want minimum EBITDA of $4 million and the company can be location anywhere in the United States.

If any of you know of something that might fit, please let me know.


#business #businessacquisition #sellabusiness #becomeabusinessbroker #businessbrokering #businessvaluation #MergersandAcquisitions #buyabusiness #sellabusiness #realtor #realestateagents


The author is the founder, in 2001, of Worldwide Business Brokers and holds a certification from the International Business Brokers Association (IBBA) as a Certified Business Intermediary (CBI) of which there are fewer than 500 in the world. He can be reached at jo*@Wo*******************.com

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