20 May A Broker Is More Than Their Rolodex
One of the first questions sellers ask us is some version of: “How many buyers do you already have for a business like mine?”
It’s a reasonable question. If you’re selling a plumbing company in Albuquerque, you assume your broker should already know every competitor, every strategic buyer, every private equity group rolling up businesses in your market.
Sometimes we do. Just as often, we don’t. Of all the things a business broker brings to a transaction, the contact list is the least of them.
Here’s why.
Buyer Lists Expire. Markets Don’t Wait.
Buyer databases age quickly, and the market moves constantly. The group that was aggressively acquiring in-home senior care businesses six months ago may now be absorbed in integrating prior acquisitions. A platform paying premium multiples last year may be constrained today by lenders, interest rates, or internal portfolio problems. An operator who was eager early in the year may have stepped back after one difficult deal.
Even a current, accurate list of operators already active in your field doesn’t necessarily translate into viable buyers. The work is in the positioning and marketing that generates inbound interest; not in who we already know.
A broker who leads with their contact list is leading with their most perishable and weakest asset.
The real work of selling a company has to do with judgment: knowing how to determine what a business is actually earning on a transferable basis, how to position it so buyers understand the opportunity without oversharing sensitive information early in the process, how to screen serious buyers from tire-kickers, and how to create the kind of competitive tension that protects a seller’s leverage.
Most importantly, it has to do with understanding sequencing, negotiations, and deal structure. That’s where transactions succeed or fall apart.
The Same Questions, Every Time, Regardless of Industry
The mechanics of selling a business are more industry-agnostic than most sellers expect. Whether it’s an electrical contractor, a medical practice, a restaurant group, or a software company, every transaction ultimately comes down to the same core questions:
- How much is the business truly earning – not just on paper, but on a basis a buyer’s lender will accept?
- What is the quality of their earnings?
- How dependent is it on the current owner?
- How transferable are the customer relationships, employees, licenses, and operational systems?
- Who is financially and practically capable of owning and operating this business; and can they actually get it across the finish line?
That last question is less obvious than it sounds. In the building trades and medical professions, the qualifying license is often personally tied to the owner, not the business entity. In those situations, the license doesn’t transfer with the assets. If this issue isn’t identified proactively, a seller may find themselves late in a process with a buyer who can’t close on the business.
A similar dynamic plays out in regulated industries where operating authority is tied to a specific permit or certification. We worked with a non-emergency medical transportation operator whose business depended on a state operating permit issued by NMDOT. Before the business went to market, we researched whether a new owner could obtain that permit independently, determined the conditions and timeline, and structured the transition so operations could continue without interruption while the new permit was being established. That kind of regulatory homework doesn’t show up in a contact list. Rather, it’s often the difference between a deal that closes and one that doesn’t.
By opening up your business to a broader base of buyers, we preserve your leverage.
When the Buyer Knows More Than You Do
The seller who asks about the Rolodex is often worried about the wrong thing. They’re focused on whether the broker knows the right buyers, when the more important question is whether the broker can protect them once a sophisticated buyer enters the picture.
Sometimes the right buyer is a strategic acquirer – a larger operator in your sector, a private equity-backed platform, a consolidator who already knows your market. These buyers often come with real advantages. They understand your business, they may be able to move more quickly than the SBA, and their offers, due diligence, and contracts are all standardized.
But familiarity with your sector is a double-edged sword.
Strategic buyers and rollup platforms have typically done dozens of these transactions, most without the involvement of a broker or intermediary. That’s often not a bug but a feature. When no one in the room has seen as many transactions as they have, they get to define what’s standard, what’s customary, and what a fair deal looks like.
They know how to present terms that look attractive at first glance while quietly shifting risk back onto the seller. They know how to front-load the process with due diligence, requiring the seller to comb through their books, consult with their CPA, and generate reports ad nauseam, with no guarantee that it will lead anywhere. By the time an offer does arrive, the seller is fatigued and often invested in moving forward with this buyer. Call it sunk cost.
A seller negotiating on their own is operating at a significant informational disadvantage. A broker doesn’t eliminate that gap, but they close it considerably.
What You’re Actually Hiring For
A broker’s job is to run a process that surfaces the right buyer, prepares the business to withstand scrutiny, structures the deal to protect the seller’s actual proceeds – not just the stated contract price but all the strings attached – and gets it closed.
That means knowing how to read a term sheet and explain what a holdback provision actually does to net proceeds. It means identifying transferability issues before they become deal-killers. It means managing the flow of information so a seller doesn’t give away their leverage.
People think brokers sell access to an established list of potential buyers. What we actually sell is judgment and experience. When the buyer on the other side of the table has done this before, and increasingly many have, that experience differential is the whole argument.
About Sam Goldenberg & Associates
Sam Goldenberg & Associates has been helping New Mexico business owners navigate the sale of their businesses since 1983. As the state’s longest-established business brokerage, we’ve closed deals across a wide range of industries, market cycles, and deal structures. We know what works and what doesn’t.
Further Reading
The Best Time to Plan Your Exit Is Before You Think You Need To
Selling Your Business, Christmas Style: A Mix of Red, Green, and Real Work
Ready to Sell? How to Showcase Your Business’s Strengths
