• Buying and selling a business without a broker

    There have been several threads over the years discussing buying websites without a broker. There is an interesting article in this week's Crain's Chicago Business (also online at http://www.chicagobusiness.com/artic...f-matchmaking#) discussing the problems that buyers and sellers of manufacturing businesses have finding brokers to handle small transactions (under $10 million).

    Simply put, it takes a lot of time and effort to effectively broker a transaction. The size of typical deals for websites and web-based businesses is usually much smaller than even a very small manufacturing company transaction. As a result, a so-called broker is probably going to do very little work, either in the sales effort or in due diligence. Those jobs, if done well, are very time consuming. Since brokers are usually paid only if a transaction is consummated and end up with no compensation at all in a significant percentage of cases, they must make enough money on the deals they close to compensate their efforts on the deals that don't.

    I'm curious to hear from the web brokers that are EP members. What is the smallest size deal you think you can properly broker? I'm not talking about a deal that you will take and list on your website with no additional effort. I'm also interested in what you consider the role of a broker in a website sale to entail. Do you actively identify and seek out buyers? Do you prepare detailed packages of information for potential buyers? Do you verify the information? In other words, do you do what a broker selling a small manufacturing company would be expected to do to earn his fee?
    This article was originally published in forum thread: Buying and selling a business without a broker started by David S View original post