This is the SINGLE BIGGEST MISTAKE that business owners make. While operating your business, who do you prepay without absolute certainty of receiving the products or services that you are paying for? You don’t on a daily basis and you should not.
Q - Why do business brokers charge upfront NON-REFUNDABLE fees?
A – Because business owners are dumb enough to pay them.
Don’t be that person!
Somebody asked me one time “why do business brokers charge upfront fees?”
I said think about it. “If you could get 20 chumps to give you 50,000.00 each legally and you were not required to sell their business or give them their money back – you would make 1,000,000.00.”
The brokers can really spin a convincing tail about why you should pay them before they have ever performed on your behalf.
- Market Fee
- Offering Preparation Fee
- CIM - Confidential Information Memorandum
- Market Analysis
- Cover Out of Pocket Expenses
- Validate a Clients Commitment
All of this justifying rhetoric will revolve around the concept that selling your business “will require substantial upfront work”.
I asked AI for synonyms for BS.
- Hogwash
- Malarkey
- Codswallop
- Baloney
NEVER EVER EVER PAY AN UPFRONT FEE.
To properly list, represent and sell your company you need a true trusted advisor or fiduciary.
Someone that believes in you and believes in the value of your company. Someone that will join your transaction team and lead you to a successful closing.
The right person or firm will be willing to commit and perform based upon their confidence that they can successfully sell your company for the amount you are seeking.
A success fee is the only fee concept that protects you and fully incents your representative.