Vincent Murphy
Business Broker
Murphy Business Sales
9 Faunbar ave
Winthrop MA
617-892-4554
bizbrokermurphy@gmail.com
IBBA Member Vincent D Murphy
Letter From The Chair
WARREN BURKHOLDER, IBBA CHAIR
Get It & Share It
When asked ‘What Does the IBBA Do?’ I am reminded of the overarching end, or objective of the IBBA, that says it exists so that business brokers, advisors and intermediaries within the Main Street business brokerage profession have access to like-minded members and groups, whereby they receive professional support, services and benefits and where the value the Members receive far exceeds the cost to them. This is further defined as:
- Having access to the most relevant and advanced Main Street educational opportunities.
- Being part of a network of business brokerage professionals which are aware of each other, regularly communicate with, and learn from each other.
Education comes from two options, the self-taught school of competition and hard knocks, and that which is learned from others as a result of a mentoring relationship. It could also come from reading, classes designed to focus attention on actions, and activities that have produced success for others. I’m here to bear testimony that the latter is much more effective and less costly than the former. The deals that did not produce the expected outcomes are well remembered, but it is not always clear exactly what I did wrong. I understood what it cost to lack the knowledge and skill to reach the closing efficiently, but I often only knew what not to do next time, not what I should have done.
I have had the privilege to be part of the IBBA education program for 15 of my 32 years. In business brokerage, I have found that this is an endless journey, not a once and done thing. The more I learn, the more I appreciate how little I really know. In hindsight, I realize that my failures were almost all avoidable. If only I had known how to do “X”, I probably would have closed the deal and earned a fee. Or at a minimum, closed the deal with much less time and resources than were actually spent.
Business Brokerage is a dynamic activity. There are many moving parts and those that learn the fundamentals early and develop the contacts with other experts (successful brokers and intermediaries) in the industry will enjoy the greatest success. The Sellers reasonably expect you to be the Expert. The Buyers will respect and conform to your level of expertise. Other brokers will seek your participation and be willing to share with you based on their respect for your level of knowledge and skill. Therefore, it is logical that anyone seeking success as a business broker or intermediary will want to be as well educated, qualified, and prepared for the assignments available. Why should anyone refer you to someone else, or select you to broker either the sale or the purchase of a business if you are not the best qualified for the challenges of the task?
Education precedes experience. Together they lead to success. Get It & Share It!
Best regards,
Warren Burkholder, CBI, Fellow of the IBBA, IBBA Chairman’s Award, MCBA, ASA
Best Practices – The Closing Checklist
BRENDA SALI, CBI
Best Practices – The Closing Checklist
It is not uncommon for deals to get off track after an offer is accepted, and often it is the result of inadequate communications between the broker, the buyer, the seller, and/or their attorneys. One technique to mitigate the problem is to use a closing checklist and frequent conference calls between the buyer, seller and broker.
The ideal type of closing checklist will use the “What-Who-When” format, also known as a W-3 form. It states What needs to be done, Who should do it, and When it needs to be completed.
For example, “Collecting Due Diligence Documents” would normally be assigned to the Seller and Broker, and this would be done within a few weeks of acceptance of the offer. The document below is a sample of a format that the Broker may use. It should include every task that must be completed up to and after the closing date, and there is no limit to the number of tasks or milestones that must be completed on any given transaction.
Item to be Completed
Assigned To
Date Required
Completed
Provide fully executed copies of LOI or APA to all parties
Broker
8/20/18
Done
Obtain Buyer’s written request for Due Diligence documents to be reviewed & furnished to Seller
Buyer/Broker
8/22/18
Done
Collect from Seller the requested Due Diligence documents
Seller/Broker
9/1/18
Buyer signs acceptsignsigns off on the completion of Due Diligence
Buyer
9/25/18
Obtain new lease from Landlord for Buyer’s review and approval
Seller/Broker
9/10/18
Obtain from Closing Agent advance copies of closing documents & ensure distribution to Buyer & Seller for their review.
Attorney/Broker
9/28/18
In addition to the closing checklist, it is recommended that the Broker schedule a conference call within a few days of the acceptance of the offer with the Buyer and Seller. The purpose of the call is to go through all the items listed on the closing checklist so all participants know the schedule of events up to the closing date. For instance, if the Buyer is seeking bank financing, then the closing checklist might state that the Buyer will submit his completed loan package to one or more lenders within 15 days of offer acceptance. An additional milestone would then be that the Buyer should produce a loan approval letter from the lender within 45 days after applying for the loan. Since loan approval is a critical point in the process, certain tasks may be delayed until this milestone is completed.
If the business is a franchise, the closing checklist should include any steps the Buyer and Seller may have to take so the Buyer can be approved to acquire the franchise. In some cases, the buyer may have to complete the franchise training prior to the closing of the sale, and in other cases after the sale.
Certain licenses, approvals, and training may be required when acquiring a variety of businesses. For example:
- A restaurant Buyer may need to complete a Food Manager Certification & Training program required by the Health Department.
- The Buyer of a car dealership may have to apply for a dealership license from the state prior to closing the sale.
- The Buyer of a liquor store or bar may have to apply for a state liquor license and be approved prior to the closing.
- The Buyer of a wholesale distribution business that sells a certain brand of electronic equipment may have to be approved by the electronic equipment vendor to continue to sell the product after the closing.
- A foreign visa buyer will most likely want to receive their visa prior to the closing.
It is important to note that it is incumbent on the Broker to understand if any special milestones need be included on the closing checklist.
If a letter of intent was used to make the offer, then one of the milestones should be the submission of the draft purchase agreement from the Buyer. This should occur at least 2-3 weeks prior to the planned closing date to facilitate any negotiations that might need to take place. This may also require a conference call or two between the Buyer’s and Seller’s attorneys. The same should apply if the Seller will be offered an employment or consulting agreement as part of the transaction.
To keep everything on track, the broker should hold periodic conference calls with all parties
- to check off completed events,
- highlight events that are running behind schedule,
- and to make sure the correct emphasis is placed on events with upcoming due dates.
Good communications are essential to keeping deals on track, and it is the Broker’s job to keep everyone informed, address any issues or miscommunications immediately, and use experience and creativity to solve any problems.
By following this Best Practice and other IBBA recommended Best Practices, a Business Broker will earn the respect of both the Buyer and the Seller. Such respect leads to referrals and helps solidify the Broker’s personal brand!
Brenda Sali is a Business Intermediary at Coastal Business Intermediaries in Melbourne, FL. Brenda has earned the designation of Certified Business Intermediary (CBI) and is a member of the IBBA Conference Committee. She brokers business sales and provides business valuation and business advice to business owners planning to exit their business in 2-5 years. Coastal Business Intermediaries is a lower middle market M&A intermediary firm with a specialty in valuing and selling insurance agencies and brokerages nationwide. Brenda can be reached at bsali@cbi-florida.com.
Upcoming IBBA Learning Webinar
Business is About Relationships: Learn the 4 Communication Types & How to Connect
Wednesday, September 12, 2018
12 pm EDT
Join Julie Hutslar, of Advantage Interpersonal Relations Training, to learn the four basic ways people express themselves. Learn how to recognize them; how to understand and be understood; how to offer appreciation and acceptance in their language; and how to bridge the gaps to connecting and communication.
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