The Market and the Players

The profession involved in selling businesses as an agent, is evolving quite rapidly.

In 1974, when Doug Robbins commenced his practice of selling businesses, there was no one practicing business brokerage; the only folks actively engaged in selling businesses were a few Real Estate Brokers and of course, stock brokers. In many jurisdictions, in order to sell a business, one needed to be licensed under that jurisdiction’s Real Estate Act. There are 17 states in the US and all provinces in Canada that require registration under their Real Estate Act.

Business brokers are defined as those people who represent the sale of a business much the same as a realtor represents the sale of real estate. Much of the rational for licensing is that the business being sold operates from real estate either through ownership or lease/rental agreement, and as such the real estate license is a requirement.

The business brokerage market is broken down into three main areas primarily by size of the transaction or enterprise value:

• MAINSTREET...$50,000 to $1,500,000
• MIDSIZE…$750,000 to $25,000,000
• LARGE…$15,000,000 to unlimited $

The first thing you will note is that there is a fair amount of overlap between the sizes. That has a lot to do with the complexity and type of transaction. For example, a small Hi-tech software firm could be sold as a stock sale and be quite complex, whereas the sale of a motel could be a simple asset real estate transaction and be worth a couple of million dollars. The skills of a business broker would be needed for the Hi-tech transaction, but a realtor could handle the sale of the motel.

• Business brokers
• Real estate brokers
• I-bankers
• Consultants
• Lawyers & Accountants
• Business Intermediaries

Business brokers, for the most part spend the majority of their business life selling business in the market known as Mainstreet. During the last twenty-five years, there has been rapid growth in this market area of the profession. Numerous associations have been founded, the most notable being the International Business Broker’s Association currently boasting a membership in excess of 1,700 members, mostly in the USA and Canada. There are dozens of local chapters of the International Business Broker’s Association, throughout North America. The principal focus of these Business Broker’s associations is education. The International Business Broker’s Association has more than 28 one-day courses that, upon successful completion, support the granting of a certificate of competency, known as a CBI (Certified Business Intermediary). There are now over 550 business brokers with their CBI

• The M&A Source: (affiliated with the International Business Broker’s Association) there are currently 275 members, who can earn the coveted designation M&AMI (Merger & Acquisition Master Intermediary) through a combination of courses and experience.
  
• The Institute of Certified Business Counselors: (this is one of the oldest associations) there are currently about 150 members and members can earn a designation CBC (Certified Business Counselor)
  
• The Alliance of Merger and Acquisition Advisors: (this is a recently formed organization that is growing quickly) there are approximately 200 members, many of who are public accountants interested in specializing in the sale of businesses. There are also a large number of members from the International Business Broker’s Association who have joined to further their education and networks. Extensive training courses are available form the AM&AA for which the designation CM&A is granted (Certified in Merger & Acquisitions)

There are numerous networking organizations which intermediaries belong, the most notable being ACG (Association for Corporate Growth) and it’s numerous chapters throughout the US and Canada.
The largest companies, when it comes to mergers and acquisitions are usually represented by stock brokerage houses, and bank’s M&A departments.