Offer to buy.

A few years ago made a similar post with no decision being made.

Within past 3 months have received 2, cold calls from "agents" representing capitol investment firms seeking to negotiate purchase of my company. The caller is unable to detail anything about our market other than what was gleamed off our web site. Smells of a scam. But, am at a loss to appreciate what angle they're working. Am interested in hearing from other shop owners that have also been solicited.

So far have responded with, company is debt free, making record profits and turning away millions in quote requests. (True situation.) That selling is not a consideration at the present time.

Please, no replies from other than shop owners.

I have not heard of any scams like this.

A good friend of mine has a business that was doing very well as you describe. He refused to entertain selling to his deep pocketed competitors when times were good. When the situation changed and he was interested in selling there were no offers of coarse.

It's not a scam. It's a business broker trying to get you on the hook as a client with a business he can sell. Much like a realtor soliciting you to use him to sell your house that you haven't yet said is for sale, he wants to get you to sign a contract that entitles him to a percentage of what you get for the business in the next few years. He'll approach you with promise of many potential buyers in his pocket for "A business just like yours", then once you are landed he'll start looking for those buyers and try to get you together so he can collect.

I've had this by mail and by telephone cold call several times a year, for the past 25-30 years. More in fat times, fewer in lean times.
If you DO want to sell, pick your own broker, not one of those cold callers. Once you talk to a real one you'll see how this works. So not really a scam, but not much better.

Mud, sincere thanks for the insight. Sort of what I suspected. Except in one case the potential buyer was identified. Doing some homework saw no connection to my firm and their portfolio. In conversation the broker claimed mgmt experience of a majority partner would yield rapid growth. No shit, able to manage over 30 gear machines into full production in a non existent labor pool. That's trick I'd like to see.

Have become hardened over the years to trust little or nothing with brokers and agents. Now work closely with an attorney to review and generate contracts. Cheapest money I ever spent. -Don

Brokers

I have worked with brokers on both sides - buying and selling.

Most are the equivalent of a commercial real estate agent. Some can give decent advice on valuation and deal structure. Most are not highly qualified.

Buyers agents are paid by people wanting to buy a specific type of business, usually in a specific location. The agent runs a marketing campaign to solicit companies fitting the buyer’s criteria. For example, metal fabrication companies within 150 miles of Pittsburgh. They will gin up a list of companies fitting the criteria and use a telemarketer to make first contact. The broker will then personally call anyone who showed the slightest interest. Sometimes the buyer even has a specific list of companies they are interested in.

Sellers agents need a portfolio of companies to sell. Sales take time so they need an inventory to work off of. They run similar campaigns to find clients.

My advice is find out if the broker is working on behalf of a buyer and listen closely if they are. Buyers use these brokers to remain anonymous (for lots of obvious reasons). These buyers are typically serious, there is probably a solid deal to be made and it can happen quickly.

Run like Hell if they are a seller’s agent. They will almost always try to lock you in an onerous contract and you will wait on ice until they get around to maybe finding a buyer. Since they do not know you or the market, they will peddle your business to everyone and you will be left sorting out lots of halfhearted or crazy offers.

If you want to sell, get an advisor of your choosing and take your time to prepare for a sale.

One pretty-much-a-scam is brokers that will lock up your property for some fixed price, with payment due upon closing (. . . . at some unspecified time in the future). Then they go looking for a buyer at some higher price. Meanwhile, perhaps years in the making, you can't sell your own property. Costs the broker nothing to hold the property - you're paying the taxes etc. Costs them nothing or some pittance of earnest money if a buyer never materializes.

All in the fine print.

Searchers, fundless sponsors, independent sponsors...

10 fingers said:

A few years ago made a similar post with no decision being made.

Within past 3 months have received 2, cold calls from "agents" representing capitol investment firms seeking to negotiate purchase of my company. The caller is unable to detail anything about our market other than what was gleamed off our web site. Smells of a scam. But, am at a loss to appreciate what angle they're working. Am interested in hearing from other shop owners that have also been solicited.

So far have responded with, company is debt free, making record profits and turning away millions in quote requests. (True situation.) That selling is not a consideration at the present time.

Please, no replies from other than shop owners.

Click to expand...

M&A activity is burning up.

Brokers don’t really care about the nitty gritty of your business that much unless it’s an industry specific sell side shop.

There is an entire segment of searchers, fundless sponsors, and the like chasing deals at all points of the LMM segment.

Then you have shop owners like me who are actively hunting for more parallel businesses to acquire as add ons or additional business units.

Chances are if you have a real business with more or less stable revenue, you can throw a rock and hit 10 brokers that will line up to sell it for you.

Why are you answering the phone?

Seriously, anyone who, first does not ask for me by name[business owner, person in charge of blah de blah]
'click'

I get lots of calls that I have no idea what they are about

'click'

New business?

They say 'Hello, my name is x, from y corp, and we got your number from z'

I get unsolicited calls here and there for the same thing. I never pick up, but they leave messages. Pretty sure most like callers aren't selective in who they call. I doubt anyone would want to buy a one man job shop, without a product line. They most likely are parasites or scammers.