Should owners use agents when selling their agencies?Posted: February 17, 2011 | |
Seems my last post has annoyed some of the agents who represent sellers of agencies. So I thought I should address the issue of whether agency owners are better off using agents, or whether they should fly solo. Here’s my take:
- Not all agents are sharks – some actually help firms understand the value they have created and get them to realize what would constitute a good buyer. In other words they add value to the process.
- Not all agents charge on a commission basis. Put another way they are not necessarily focussed on the price but rather the sale itself. Some even argue with owners that they are not ready for sale. These are the ones you should hire as they are giving real counsel.
- Not all agents are in a hurry to make the sale – some appreciate that the right deal may take a long time. This could mean as long as a year if there are complexities to sort out on equity holdings and or tax.
- Not all agents ignore chemistry and culture – some appreciate that there has to be good chemistry and a cultural fit between buyer and seller. After all, they are going to be working together for years to come.
Of course there are agents who do quite the opposite on all of these, just as there are real estate agents who will happily sell houses that are about to fall down. In other words, there are good agents and bad ones. The good ones are worth their fees and will earn them, the others are not. My bigger issue with the use of agents is when they effectively auction off businesses. I completely understand why this happens but in the people-based industry we live in, this creates challenges. When buyers pay top dollar for a business, they will need that business to perform at its peak for quite a few years to come. This often means running a business for short term profit. This often means the staff who work there feel they are being pushed too hard and the clients in the business can sometimes feel they are getting a lesser service. Put another way, buyers can only pay what a business is really worth, so if a seller demands an inflated price, then the buyer will demand inflated performance to cover that price. Good agents will respect this and make it clear to the seller what the consequences of the best price are, some will not.
So should owners use an agent? Only if they find the right one.