IBBA Insights Summer 2023

Embracing Our Legacy, Shaping Our Future

By Pino Bacinello, 2024 IBBA Chair

+ Business Brokering

+ Inventory in Business Brokerage

+ Why Owners Should Hire an IBBA Member Broker

+ Overcoming Conversational Blindspots

+ The Path to Authority for Business Brokers

+ Legislative Updates and More!

The best insights on buying and selling small businesses

BUSINESS BROKERING: CHALLENGES, APPROACHES, AND KEYS TO SUCCESS

INVENTORY IN BUSINESS BROKERAGE. SOME THOUGHTS

MORE TRUTH THAN FICTION –WHY A BUSINESS OWNER SHOULD HIRE AN IBBA MEMBER BROKER

OVERCOMING CONVERSATIONAL BLINDSPOTS: KEY TO EFFECTIVE BUSINESS BROKERING

SPECIALIZING IN AN INDUSTRY NICHE: THE PATH TO AUTHORITY FOR BUSINESS BROKERS

LEGISLATIVE UPDATES

Embracing Our Legacy, Shaping Our Future

PINO BACINELLO

CBI,

MCBI, M&AMI | 2024 IBBA Chair

Attending this past amazing IBBA Conference in Louisville, on this 40th birthday of the IBBA, I was deeply humbled by being inducted in the inaugural IBBA Hall of Fame. Humbled because it made me reflect on what I gave to the IBBA to deserve such recognition. In reflecting on my past 20 years involvement, I can honestly state that much of what I have learned and know, came from my participation in the IBBA. The multiple committees I served on, articles I wrote, courses I created and taught, workshops presented and serving twice as Chair are just some of those activities. I say all this because, as much as it appears I have done or given to the profession, the profession has given me so much more in return. The IBBA can do the same for you, but it all starts with your participation, and involvement.

As we reach the midpoint of this 40th anniversary year, I reflect on our collective achievements, and look forward to the exciting opportunities that lay ahead for us all. The IBBA has always been a beacon of professional excellence, camaraderie, education and progress. Our strength lies in the dedication and active involvement of our members. Now more

than ever, as we continue to grow, we need each of you to engage, participate, and contribute to the thriving business brokerage community we are building together. Share in our VISION and help sustain our joint growth and success.

THE POWER OF PARTICIPATION

Starting with our founders, our association was built on the principle of volunteerism. All initiatives that fall within our focus areas, have been, and are, driven by you, the members, who generously and selflessly donate their time, knowledge, skills, and passion, to drive the success we see here today. As someone who has served in various capacities over the last 20 years, have witnessed first-hand the transformative power of member participation.

Volunteering within IBBA is not just about fulfilling a duty, it is about making a tangible impact on our business brokerage profession; on each other’s professional journey; and on our surrounding communities. Your involvement can take many forms, from participating in committees and leadership, to writing and/or

presenting subject matter workshops, auditing and teaching classes, sharing insights and expertise through webinars and articles, becoming a mentor to new members, or simply participating and sharing in conversations at conferences. Each contribution, no matter how small, helps us grow stronger and more resilient, and impactful.

OPPORTUNITIES TO GET INVOLVED

There are many ways to start or expand your involvement with the IBBA.

Committees And Task Forces: Join one of our many committees. Whether your interest lies in Education, Membership Growth, Conference Planning, Women’s Empowerment or others, there is a place for you to make a difference. Committees are the lifeblood of our organization, driving essential initiatives that benefit all members. They are also the starting point for one’s road to leadership. Some one once said, “If serving is below you…then leadership is beyond you.”

Member Mentorship: Experienced professionals like you have a wealth of knowledge to share. I have had the blessing of working within multiple industries and I can tell you that this is by far, the most giving and sharing industry I have ever known. I have personally been a beneficiary of such wide-open sharing. By becoming a mentor, you can guide the next generation of business brokers, and help them navigate the

complexities of our profession while fostering a culture of continuous learning, ethics, integrity and professionalism. If you are a CBI, I encourage you to start this mentorship by volunteering with our “Ask A CBI®” program (contact Emily Bowler at ebowler@ibba.org if interested).

Event Participation: Our conferences, webinars, and networking events offer valuable opportunities to connect, learn, and share. Attend these events not only to enhance your own knowledge and gain insights, but also to contribute your perspectives and experiences. Consider presenting at a webinar or leading a workshop at our next conference. Check our Events page often, for upcoming opportunities, and stay connected with our social channels for the latest updates.

Content Creation: Our conferences, webinars, and networking events offer valuable opportunities to connect, learn, and share. Attend these events not only to enhance your own knowledge and gain insights, but also to contribute your perspectives and experiences. Consider presenting at a webinar or leading a workshop at our next conference. Check our Events page often, for upcoming opportunities, and stay connected with our social channels for the latest updates.

BENEFITS OF INVOLVEMENT

Active participation in the IBBA brings numerous benefits. Beyond the satisfaction of contributing

to the advancement of our profession, you gain access to a network of like-minded professionals, opportunities for personal and professional growth, and the chance to shape the future of the business brokerage community. Involvement enhances your visibility and reputation within the industry, opening doors to new opportunities and collaborations, and including leadership.

A CALL TO ACTION

As we navigate the second half of 2024, I encourage each of you, to reflect on how you can contribute to our vibrant business brokerage community. Remember that it is impossible to give without receiving back, (often much more than you have given). Consider where your passions and skills align with our needs and take the step to get involved. Together, we can achieve great things and continue to uphold the high standards and values that define us as the IBBA.

Your participation is not only a gift to the association, but also an investment in your own professional development. Let us embrace the spirit of volunteerism, support one another, and work collaboratively to shape the future of our profession.

In closing, I am compelled to draw each and everyone’s attention to our most important and overarching “END” of our organization (this may also be considered our mission, or reason for being):

The IBBA exists so that business brokers, transaction advisors and business intermediaries have access to other Members and groups of this community, whereby they receive professional support, services and benefits and where the value the Members receive far exceeds the cost to them.

Thank you for your dedication and commitment to the IBBA. I look forward to seeing the incredible contributions you will make in the coming months, and the continued success of our Association as we embrace our legacies and shape our future.

Warmest regards,

PINO BACINELLO | CBI, MCBI, M&AMI 2024 IBBA Chair

Business Brokering: Challenges, Approaches, and Keys to Success

HOUMEHR MIKE PANOUSSI

Business brokering, a critical segment in the world of commerce, involves facilitating the sale and acquisition of businesses. This field is intricate, requiring a blend of financial acumen, marketing expertise, and negotiation skills. Business brokers act as intermediaries, connecting sellers with prospective buyers and ensuring that the transaction process is smooth, transparent, and beneficial for both parties. Despite its potential for lucrative rewards, business brokering presents a unique set of challenges. Understanding these challenges and the strategies to overcome them is vital for success in this profession.

CHALLENGES IN BUSINESS BROKERING

1. Valuation Complexity: One of the foremost challenges is accurately valuing a business. Unlike tangible assets, the value of a business includes intangible elements such as brand reputation, customer loyalty, and intellectual property. Brokers must use various valuation methods, such as incomebased, market-based, and asset-based approaches, to arrive at a fair price.

2. Confidentiality Concerns: Maintaining confidentiality is paramount in business brokering. If employees, customers, or competitors learn about the sale prematurely, it can jeopardize the business’s operations

and value. Brokers must navigate this by carefully screening potential buyers and requiring non-disclosure agreements (NDAs).

3. Market Dynamics: The market for buying and selling businesses can be volatile. Economic conditions, industry trends, and regulatory changes can impact the desirability and value of a business. Brokers need to stay informed about these factors and advise their clients accordingly.

4. Emotional Stakeholders: Business owners often have a deep emotional attachment to their businesses, which can complicate the negotiation process. This attachment can lead to unrealistic price expectations or reluctance to part with the business. Brokers must manage these emotions and facilitate a rational decision-making process.

5. Buyer Qualification: Finding the right buyer is crucial but challenging. Brokers must assess potential buyers’ financial capabilities, experience, and intentions to ensure they can successfully run the business. This requires thorough vetting and often involves overcoming buyers’ apprehensions and doubts.

APPROACHES TO BUSINESS BROKERING

1. Comprehensive Market Analysis: Conducting a thorough market analysis helps brokers understand current trends, comparable sales, and industry benchmarks. This data is essential for setting realistic price expectations and developing effective marketing strategies.

2. Robust Marketing Strategies: Effective marketing is key to attracting potential buyers. Brokers use various channels, including online business-for-sale marketplaces, industry publications, and direct outreach. Crafting compelling listings that highlight the business’s strengths and opportunities is crucial.

3. Due Diligence: Due diligence is a critical step for both sellers and buyers. Brokers facilitate this process by organizing and presenting financial records, legal documents, and operational details. Ensuring transparency and accuracy during due diligence builds trust and reduces the risk of post-sale disputes.

4. Negotiation Skills: Successful brokers are adept negotiators. They balance the interests of both parties, mediate disputes, and work towards mutually beneficial terms. Effective negotiation requires understanding each party’s goals, constraints, and leverage points.

5. Legal and Financial Expertise: Brokers often collaborate with legal and financial professionals to navigate the complexities of business transactions. This team approach ensures that all legal and financial aspects are addressed, reducing the risk of future liabilities.

KEYS TO SUCCESS IN BUSINESS BROKERING

1. Building Trust and Credibility: Trust is the cornerstone of successful business brokering. Brokers must demonstrate integrity, confidentiality, and competence. Building a solid reputation through consistent performance and positive client testimonials is essential.

2. Networking: A strong network of contacts within various industries enhances a broker’s ability to find buyers and sellers. Networking with other professionals, such as accountants, lawyers, and bankers, can provide valuable referrals and insights.

3. Continuous Learning: The business brokering landscape is constantly evolving. Brokers must stay updated with the latest industry trends, regulatory changes, and best practices. Continuous professional development through courses, certifications, and industry conferences is crucial.

4. Client-Centered Approach: Successful brokers prioritize their clients’ needs and goals. Understanding the unique aspects of each business and tailoring strategies accordingly ensures better outcomes. Providing personalized service builds client loyalty and leads to repeat business and referrals.

5. Effective Communication: Clear and transparent communication throughout the transaction process minimizes misunderstandings and fosters trust. Keeping all parties informed about progress, challenges, and next steps is vital for a smooth transaction.

In conclusion, business brokering is a challenging yet rewarding profession. It requires a multifaceted approach that combines financial expertise, being marketing savvy, having negotiation prowess, and strong interpersonal skills. By addressing the inherent challenges and adopting effective strategies, brokers can facilitate successful transactions that benefit both sellers and buyers, ultimately driving economic growth and entrepreneurial success.

MIKE PANOUSSI panoussi.lba@gmail.com

HOUMEHR

DALE SHEPHERD MCBI, CBI

Over a thirty-plus year corporate career and over ten years as a Business Broker / M&A Advisor, I have found many areas of inventory accounting that could be of interest to the business broker who wants to maximize the price for a Seller.

I have found that general practitioner CPAs (as compared with specialist CPAs) do not account for Inventory correctly in companies because business management focuses on the minimization of tax liability.

Manufacturing entities have inventory of various kinds and Business Brokers should at least know what each category is and how the accounting process should work. There are Raw Materials, Indirect Materials, Finished Goods, Direct Labor, Work-In-Progress (WIP), Indirect Labor, Direct Overhead, and Indirect Overhead components of Inventories. Business management of earnings by not accounting for inventory according to Generally Accepted Accounting Procedures manages the tax bill for the prior year’s results in a direct understatement of Seller’s Discretionary Earnings (SDE).

Construction Businesses generally have unfinished projects at the end of each year, why don’t they have WIP Inventory on the books at year-end? Answer, it reduces Taxable Income.

What should we do? First, anytime I discuss a business with a potential Seller, I tell them that

we want to get their books stated correctly. This is so we can demonstrate the quality of their financial records to a potential buyer and increase the SDE, thus the resultant price with whatever multiple is used for pricing. If I am fortunate enough to get someone who is planning on selling the business in the future, I tell them to record inventory correctly at the latest year-end if they have not filed their tax returns. What happens?

For example. a construction business averaged $75,000 plus of WIP at each year-end. This was written off to Cost of Goods Sold which resulted in lower taxable profit and lower SDE. There were Revenues of $12 million plus a year and taxable income of $650,000. The business grew a bit each year. It appeared that the business would have a 3.3X multiple of SDE from the comparable business sales with their niche, revenue growth, and served market. At a 3.3X the value would be over $2 million and if we could have the prior year-end “corrected” to reflect the correct WIP Inventory, we could have added $75,000 times 3.3X or $220,000 plus to the List Price. The financial Partner wanted to clean this up but the Operating Partner who was a seasoned veteran did not agree because that meant that in April, they would add $35,000 to their tax bill. He couldn’t understand that paying $35,000 in additional taxes (a one-time event) for an additional pricing of $220,000 plus was a smart move.

Here is another example, many years ago I looked at a very interesting company that bought special kinds of engines and tore the engines down for certified parts reporting $350,000 of SDE a year and $400,000 of inventory. They had an appraiser come and do an appraisal of their inventory. The appraised material cost value of their inventory was $2.5 million (I argue that the cost of people tearing down the machines and certifying the inventory should have been in inventory as Labor and not expense). Every year they wrote off all newly acquired engines to Cost of Goods Sold. They were understating earnings by an average of $650,000 or more a year. How was the business priced? Two times SDE of $350,000 plus the $2.5 million of Inventory or $3.2million.

Having knowledge of Inventory Accounting, having Inventory properly stated at the last yearend, and if possible, for the coming year’s Budget, can and should result in a higher selling price for your Sellers.

They broker couldn’t get anybody interested in acquiring the business. What was the real value? If you have a business making a million dollars a year ($350 + $650) with $ 2.5 million of inventory, I believe that they should have been listed for at least $4 million.

So, playing games with the numbers over the years resulted in understating the value of the business and making the business unsaleable.

(When SDE can’t support Debt Service, it makes a business very difficult to sell. Assuming 20% down by Buyer, claimed SDE $350,000 Case, annual SBA Payment on $2.5 million financed at 9% is $380,000, in the second case $1,000,000 SDE for $3,200,000 financed at 9% is $486,000 of debt service. Which numbers would you like to present to a Buyer?)

My last example is what knowledge of Inventories can do to help maximize value in a normal situation. I marketed and sold a business for $2.5 million. They did not record Work-inProgress inventories. I marketed the business for a multiple of Earnings plus WIP Inventory to be calculated at the date of sale. I worked with the Seller and Buyer to identify the Raw Material value as well as the Labor value tied up in WIP at the sale date. Including Labor added another $35,000 to the funds received by the Seller. If I did not understand that Labor should be a part of WIP and how to discuss this with a Buyer, my Seller could have lost this extra $35,000.

So, my argument is that having knowledge of Inventory Accounting, having Inventory properly stated at the last year-end, and if possible, for the coming year’s Budget, can and should result in a higher selling price for your Sellers; thus, an increase in your commissions from successful business sales. The key is to have two to three years of quality/consistent financial information. Higher quality financial records support the pricing and sale of the business.

Remember that general practitioner CPAs have little understanding of detailed inventory accounting and generally operate according to the common practice of the business owner. Operating Accountants and business analysts understand inventories and appreciate seeing a business with quality accounting standards and practices.

Think about these points the next time you look at a manufacturing or construction business!

DALE SHEPHERD | MCBI, CBI dales@capitalbbw.com

More Truth than Fiction

Why a Business Owner Should Hire an IBBA Member Broker

JOHN FINCHER

On a crisp blue-sky spring day in April, two men met one another at a bill fishing tournament. Unbeknownst to each other, both men had sold their businesses three years ago.

Both men were high achievers and had worked passionately building their enterprises. One focused on customer intimacy and was all about enriching his customers’ lives by providing unique, expensive products that the consumers were more than willing to pay for. The other provided his customers with operational excellence driven by systems and processes, resulting in predictable service, reliability, and the lowest cost possible.

Five years prior to that very day in April, both companies’ EBITDA earnings were within a few thousand dollars of each other. Both entrepreneurs had created and grown extraordinarily successful companies with great profit margins excelling in their respective industry.

The two men had attended the same university and even raised the same number of children – two daughters and one son. They had similar lifestyles and both men thoroughly enjoyed fishing.

Three years ago, something vastly different happened and when the two men met recently at an international bill-fishing tournament in the Cayman Islands, one was the hired deckhand, and

the other was the owner of the seventy-sevenfoot Hatteras yacht. The latter also owns a golf course, but that is another story.

WHAT WAS THE DIFFERENCE?

The former business owner who hired on as the deckhand thought he could continue running the business while also managing the sale of his business himself. He thought he could sell the company with just a couple of months’ effort and time. He thought he could even save money in the process by not having to pay a professional business broker.

He enticed a competitor to look at his financials without even signing an NDA. Word leaked out to his employees – to this day he still does not know how, but as a result, key personnel became nervous and left. Sales and production suffered, and the company began rapidly trending downward in revenue and profit. When he finally received an offer from the one interested buyer fifteen months later, it was painfully low.

It finally dawned on him that when you only have one buyer – the buyer actually has you! By this time, the competitor knew everything about his business including his customers and his trade secrets. The business owner was desperate after over a year’s time of frustration and declining revenue and profit, so he sold to clear his debt and walk away with a small amount of cash.

The other business owner hired an IBBA broker to represent him in selling his business. He continued running the business, growing revenue and profit.

The IBBA broker prepared an expert marketing package about the business with recast financials showing the true EBITDA earnings of the company and marketed the business aggressively using their database of qualified buyers, the world wide web, as well as their many professional contacts in the legal, accounting, wealth management and business coaching and consulting fields. The IBBA broker provided and ensured that the prospective buyers signed a well-constructed NDA, approved by the seller’s counsel, with adequate protection for the seller. The IBBA broker screened the

buyers and avoided wasting any of the business owner’s time with unqualified buyers.

Multiple buyers became interested, and the IBBA broker was able to help negotiate a Letter of Intent at full asking price, collaborating with the seller and his legal counsel, with the right buyer who the business owner chose as his successor. The value of the business was maximized, and the sale closed within nine months of starting the engagement. The current yacht owner walked away a multi-millionaire and thanked the IBBA broker for all the diligent work the broker performed in facilitating the sale, including keeping the deal on track throughout the process, constructing the secure online due diligence folders, reviewing all versions of the Purchase Agreement from a

Three years ago, something vastly different happened and when the two men met recently at an international bill-fishing tournament in the Cayman Islands, one was the hired deck hand, and the other was the owner of the seventy-seven-foot Hatteras yacht. The latter also owns a golf course, but that is another story.

business perspective and making comments when necessary, and for being the emotional buffer when needed between the seller and buyer.

Those two businesspeople I mentioned at the beginning of this letter: They won the bill-fishing tournament. The yacht owner received $120,000 for winning and he gave the deckhand a bonus of $1,000 dollars for a job well done. What made one’s fishing success worth so much more than

the other’s? Knowledge of deal making from an IBBA broker who successfully sold the yacht owner’s business at maximum value and the disappointing results from the sell your business yourself former business owner also known as -- the deckhand!

JOHN FINCHER | Lifetime CBI & 2023 Platinum Award Winner jfincher@corpinvest.com

Friday, May 16 - Sunday, May 18, 2025

Overcoming Conversational Blindspots: Key to Effective Business Brokering

MILTON JORDAN MBA, CBI

KATIE

As business brokers and advisors, our ability to communicate effectively with clients, prospects, and other stakeholders is crucial to our success. However, we often fall victim to “conversational blindspots” – unconscious biases and tendencies that hamper our ability to truly understand and connect with others.

In her insightful work on Conversational Intelligence (C-IQ), Judith E. Glaser highlights five common blindspots that can derail our conversations and diminish their impact. Let’s explore these blindspots and discuss practical tips to overcome them in our business brokerage practices.

BLINDSPOT 1:

ASSUMING OTHERS SEE, FEEL, AND THINK THE SAME WAY WE DO.

As brokers, we deal with clients from diverse backgrounds, industries, and mindsets. It’s easy to make assumptions based on our own perspectives, but this can lead to misunderstandings and missed opportunities.

● C-IQ Tip: Trust is the cornerstone of successful business brokering. Brokers must demonstrate integrity, confidentiality, and competence. Building a solid reputation through consistent performance and positive client testimonials is essential.

BLINDSPOT 2:

FAILING TO RECOGNIZE HOW FEAR, TRUST, AND DISTRUST SHAPE REALITY.

Emotions like fear, mistrust, and anxiety can significantly influence how clients perceive and interpret information. If we ignore these emotional undercurrents, our conversations may fall flat or even backfire.

● C-IQ Tip: Build trust by priming your next conversation for trust. You can do this by demonstrating empathy, transparency, and a genuine desire to understand your clients’ concerns. Create a safe space for open and honest dialogue, acknowledging and addressing any underlying fears or doubts.

BLINDSPOT 3:

INABILITY TO SEE THINGS FROM THE OTHER PERSON’S PERSPECTIVE.

As subject matter experts, we may become so entrenched in our own viewpoints that we struggle to step into our clients’ shoes and appreciate their unique perspectives and circumstances.

● C-IQ Tip: Practice perspective-taking by actively summarizing and reflecting back your clients’ points of view. Seek to understand their goals, challenges, and decision-making criteria before offering solutions or advice.

BLINDSPOT 4:

ASSUMING WE REMEMBER WHAT OTHERS SAID, WHEN WE ACTUALLY REMEMBER OUR INTERPRETATION.

Our brains are wired to filter and interpret information through our own lenses, often leading us to remember our personal interpretations rather than the verbatim message.

● C-IQ Tip: Take meticulous notes during client conversations, and periodically summarize and confirm your understanding of their statements and intentions. Encourage clients to clarify or correct any misunderstandings promptly.

BLINDSPOT 5:

ASSUMING MEANING RESIDES IN THE SPEAKER, WHEN IT ACTUALLY RESIDES IN THE LISTENER.

We often believe that our words and messages are clear and self-evident, failing to account for the listener’s unique interpretations and meaningmaking processes.

● C-IQ Tip: After conveying important information or advice, ask your clients to rephrase or summarize their understanding in their own words. This practice can reveal any gaps or misalignments in shared meaning, allowing for timely clarification and recalibration.

By being aware of these conversational blindspots and actively implementing C-IQ techniques, we can elevate our communication effectiveness as business brokers and advisors.

By being aware of these conversational blindspots and actively implementing C-IQ techniques, we can elevate our communication effectiveness as business brokers and advisors. Ultimately, this will lead to deeper connections, better-informed decisions, and more successful outcomes for our clients and our practices.

Remember, effective communication is not just about transmitting information – it’s about fostering mutual understanding, building trust, and co-creating shared meaning. Embrace the principles of Conversational Intelligence, and watch your business brokering skills soar to new heights.

Katie Milton Jordan | MBA, CBI katie@katiemiltonjordan.com

New Look, New Benefits!

The Q1 2024 Market Pulse Highlights are now available! Learn more and participate in our next survey to gain access to exclusive participant benefits.

GET STARTED

Specializing in an Industry Niche:

The Path to Authority for Business Brokers

NICHOLAS FARES

CBI, CM&AP, M&AMI

In the bustling landscape of business brokerage, where deals are often complex and relationships are paramount, establishing oneself as an authority is key to success. While many brokers cast a wide net, targeting a specific industry niche can be a gamechanger. This could be plastic injection molders, environmental consulting firms, refrigerated trucking companies, accounting firms, dental practices, hair salons, daycares, pizza shops, and the list goes on. By homing in on a particular sector, brokers can build deep expertise, cultivate trust within their chosen industry, drive referral leads, and ultimately grow their practice into larger-sized deals. Included below are 9 actionable steps you can take to realize the numerous benefits of industry specialization in your practice.

THE POWER OF NICHE SPECIALIZATION

In the world of business brokerage, being a jack-of-all-trades may seem advantageous, but mastering one can be even more rewarding. Specialization allows brokers to delve deeply into the intricacies of a particular industry, gaining invaluable insights and understanding nuances that a generalist might overlook. This deep knowledge breeds confidence among clients, who are more likely to trust someone with a proven track record in their specific field.

One industry statistic that can illustrate the effectiveness of specializing in a niche within business brokerage is the increase in deal

closures and client satisfaction. According to a survey conducted by the International Business Brokers Association (IBBA), brokers who specialized in a niche reported a significant increase in deal closures compared to those who didn’t specialize. This increase could be as high as 30% or more, depending on the niche and the level of expertise developed within it. Furthermore, client satisfaction rates tend to be higher among brokers who specialize, as they can offer more targeted advice and support throughout the transaction process.

DRIVING REFERRAL LEADS THROUGH AUTHORITY

Establishing authority in a niche market opens the floodgates to referral leads. When a broker is recognized as a go-to expert in their chosen industry, word-of-mouth recommendations flow freely. Clients feel reassured knowing they’re working with someone who understands the unique challenges and opportunities of their business and industry. Moreover, professionals within the niche, such as lawyers, accountants, and industry insiders, are more inclined to refer clients to a broker they perceive as an expert in the field.

GROWING YOUR PRACTICE INTO LARGER DEALS

As a broker’s reputation grows within their niche, so too does the size of their deals. Specializing in a niche can lead to higher

average deal values. According to data from industry reports, brokers who focus on a specific industry or business type often command higher fees due to their specialized knowledge, ability to identify unique opportunities, and network of industry specific buyers within that niche. Clients are willing to pay a premium for expertise, knowing that a specialized broker can maximize the value of their business within the context of their industry. Additionally, larger deals often lead to increased visibility and further opportunities for growth within the niche. These statistics highlight the advantages of specializing in a niche and underscore its potential for driving business growth and success.

Let’s look at how you can make this shift in your practice.

9 ACTIONABLE STEPS TO NICHE SPECIALIZATION

1. Identify Your Passion and Strengths: Reflect on your interests, experiences, and strengths to pinpoint industries where you can excel. Your passion for a particular sector will drive your commitment to becoming an expert.

2. Research Market Opportunities: Conduct thorough market research to assess demand, competition, and growth prospects within potential niche industries. Look for underserved markets or emerging sectors ripe for specialization.

3. Evaluate Your Existing Network: Assess your current network for connections or experiences within your chosen niche. Leverage existing relationships to gain insights and establish credibility within the industry.

4. Acquire Industry-Specific Knowledge: Invest in continuous learning to deepen your understanding of the chosen niche. Attend industry conferences, join relevant associations, and subscribe to industry publications to stay abreast of trends and developments.

5. Build a Strong Online Presence: Establish yourself as a thought leader within your niche by creating valuable content such as articles, blog posts, and whitepapers. Leverage social media platforms to share insights and engage with industry stakeholders.

6. Develop Tailored Marketing Materials: Customize your marketing materials, including your website, brochures, and presentations, to highlight your expertise in the chosen industry. Showcase case studies and testimonials that demonstrate successful deals within the niche.

7. Network Strategically: Attend industry events, seminars, and networking functions to connect with key players and decision-makers

within your niche. Cultivate relationships with industry insiders and referral sources to expand your reach and generate leads.

8. Collaborate with Industry Partners: Form strategic partnerships with professionals complementary to your niche, such as lawyers, accountants, and consultants. Collaborate on joint marketing efforts and referral programs to mutually benefit from shared expertise and networks.

9. Share Your Knowledge: Engage with your network in ways that allow you to share your knowledge and expertise that is relevant to your clients, prospects, and referral sources in an educational format, such as webinars, lunch and learns, panel discussions, and speaker engagements. Relevant topics that create value for those individuals could be

related to what is involved in the business sale process, exit planning, business valuations, and market trends.

BRANDING YOUR PRACTICE AS A SPECIALTY BROKERAGE

To brand your practice as a specialty brokerage, consistency is key. Your branding should reflect your niche expertise across all touchpoints, from your logo and website design to your messaging and client interactions. Position yourself as the go-to authority within your chosen industry, and over time, your reputation will precede you, driving referral leads and propelling your practice to new heights of success.

NICHOLAS FARES | CBI, CM&AP, M&AMI nick@neobusinessadvisors.com

Legislative Update

J. MICHAEL ERTEL

Co-Chair BIEF Campaign for Clarity

On May 6th NASAA (North American Security Administrators Association) announced that at a membership meeting today NASAA members have voted to adopt amendments to its Model Rule Exempting Certain Merger & Acquisition Brokers (“M&A Broker Rule”) From Registration by revising it to achieve uniformity with federal law, specifically the amendments to subsection 15(b)(13) of the Securities Exchange Act of 1934 to exempt certain M&A Brokers from brokerdealer registration. A copy of the amended M&A Broker Rule is available at: https://www.nasaa.org/ adopted-model-rule/

We anticipate that the 21 states [see list here] which have already adopted some form of exemption from registration for certain M&A Brokers will fairly quickly adopt the updated NASAA Model State Rule.

We also expect that many of the remaining 29 states which have yet to adopt any form of exemption for certain M&A Brokers may simply have been waiting for NASAA to finalize its Model Rule before promulgating an exemption in their state.

The process of adopting the amended Model Rule will vary state by state. Some states will be able to adopt the Model Rule simply by administrative rule making, while others may need their state legislature to pass a bill containing the Model Rule to amend their state securities laws.

Now is the time for business brokers and M&A Intermediaries to contact their state securities regulator and see what their plans are, if any, to adopt the NASAA M&A Broker Rule.

Use this NASAA webpage: https://www.nasaa. org/contact-your-regulator/ to identify your state regulator, including their contact information.

BIEF Is planning to work with Attorney Shane Hansen to survey all 50 state securities regulators to find out what plans, if any, they have to adopt the Model Rule; what issues, if any, do they foresee to adopting the Model Rule in their state; and what help, if any, do they need from local M&A Brokers and owners of privately held businesses? From this survey we should know a whole lot more about what effort is needed and where to have this Model Rule adopted in all 50 states.

So watch this space to keep abreast of the progress we’re making state-by-state, and how you might be able to help get the Model Rule adopted in your state. BIEF has already assembled several resource materials which should be helpful in educating state regulators and legislators as needed on the federal exemption and the NASAA Model State Rule.

In the meantime, please don’t hesitate to call/contact me if I can be of any further assistance.

Sincerely,

J. Michael Ertel | Co-Chair BIEF Campaign for Clarity mertel@transworldma.com

When You Want to Work with the Best, Look for a CBI

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