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Such a Deal

Roy and Lance Moore purchased a very large business using real estate equities. For years, I have been trying to get all you to try it — you will like it.

In the next few articles, I am going to cover the real problems in working on business sales. I have never taught these or written about them. They will turn out to be why so many of you avoid fantastic opportunities in business ownership. The problems are much different than real estate sales.

I attempted to get many of you interested in owning a business for the cash flow. In the past 4 months, I have worked with many of you and your family members. 99.9% of the questions and problems had to do with business brokers. They always seem to make it very difficult to get the info and eventually buy a business.

If you have had problems with business brokers, you are not alone. Everyone in every state has problems with business brokers. They are the ultimate deal killers.

I have had people calling me for years to provide them with recommendations on good business brokers. “In every thirty plus years, I have referred 00.0000000 brokers.”

Are there brokers that I work with? Yes. Yes. Yes. Are there brokers I would refer? No! No! No!

First of all, referring to a business purchase as a Biz Op is really schlock. This is a term used by business brokers to define their low level of ethics and knowledge.

In working in the area of buying and selling businesses, we have two general areas to explore.

  • We have the mom and pop businesses and smaller businesses that net anywhere from $0 to $250,000 a year. These businesses are usually listed and sold by business brokers.
  • Whey you move into the businesses that sell for over $1,000,000, you work with a different class of salesperson. They go by the title of attorney, CPA, investment banker, venture capitalist, etc. They may even answer to the term business broker, but they really don’t like it.

The reputation of the average business broker is that of a low-life. Although most of them are required to have a real estate license to sell a business, they don’t follow the same rules. If the average real estate broker (selling real estate) worked to the same standards regarding full disclosure, non-disclosure and basic honesty they would lose their licenses and go to jail.

For years I was a member of the California Department of the Real Estate Business Fraud Committee. I caused a lot of business brokers to develop a strong hatred for me. When I was teaching in Los Angeles and the brokers saw our newspaper ads, they would notify all of the brokers to challenge any callers with questions regarding any ties that they had with Art Hamel. If the caller said yes, they would hang up the phone.

In recent years, I have had occasions to work with brokers and they delight in telling me of the past. I try to explain to them that I knew their plan from day one.

If you decide to sell business or buy one, start with the ones that sell for over $1,000,000, the people selling these are great to work with. Brokers who sell the smaller ones are scum.

As you talk to owners of businesses in the future, ask them what their feelings are regarding business brokers. Their reputation is poor. The good news is that they give used car dealers, ENRON executives and Arthur Anderson auditors someone to look down on.

These business brokers also are deal killers. They usually are not too bright, have very little business knowledge and no ethics. They usually are not making a living so that they have to cheat and misrepresent to get by.

The businesses they try to sell are not really saleable based on the facts. I have been in the business for over 30 years, and it is impossible to make a living HONESTLY selling the smaller businesses.

Today, with many available businesses being on the Internet, you end up working with intermediaries on most of the deals. So if you wish to work in this arena, you must learn to work with these intermediaries.

Next article: How to get around the agents trying to qualify you financially.

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