They think that fees are too small, the buyers/sellers are less sophisticated and workload is the same. So why go for small--go for the big fish! I think differently. Problems with big deals are: They take too long; brokers’ income fluctuates too much, bargaining power of the buyers and sellers are too high, liabilities are too much…so on and so forth.

I don’t like big deals. I believe in “Fact Reversal” as one of the most powerful tools to stand out in any industry. If you think that airlines typically have assigned seats, try to reverse it and have no seat assignment. Here comes Southwest Airlines. If you think food needs to be consumed in-house, let’s try to reverse it and have delivery. Here comes Domino’s Pizza. I know they are old examples, but you get the point. When many brokers prefer big deals, I prefer small. When many brokers don’t provide, I provide.

People often think that business brokers are only intermediaries: we find buyers, we navigate the process, and we get paid. Have you thought about doing it differently? Can you provide a few years of after-sale service to the buyers, sort of like warranties? Can you provide financing? Can you even be the buyers? Can you build the business from scratch and sell it to the buyers? Can you split your brokers into buy-side and sell-side and establish a business brokerage “assembly line”?

I have been doing the above in Hong Kong. Although the market is different, principles are the same throughout the world, and that’s only feasible for small deals. My average deal size is US$50,000 per deal, but we do hundreds of them a year. For small deals, I can provide financing and diversify the risks; I can buy low/sell high or build them from scratch and sell them subsequently to make better margins (of course, conflict of interest is fully disclosed). I can split the brokers into buy-side and sell-side to operate an efficient assembly line. Lastly, for small deals, they are typically unaffected by any economic situation. There are always buyers: Investors during good times and full-timers (buy-a-job) during bad times. Our deal flow is at historic height at the moment. Thank Goodness!

Think out of the box! I hope my practice would provide you with some insight into how to modify yours. Just like our slogan, may I wish you luck in “Turning Opportunities Into Action.” Today could be your next opportunity.

By Edwin Lee, CBI, CPA, CFA
Hong Kong Business Intermediary Co. Ltd., Hong Kong
IBBA Chairman-Elect