My life as a business broker & why I left the industry- David C Barnett

My life as a business broker & why I left the industry- David C Barnett

Hey guys it’s David Barnett for
I was just on the phone earlier today with a gentleman who is exploring the idea of becoming
a business broker. He found my blog site online and some my videos about buying and selling
business and he wanted to call me up and get some feedback about my experience when I was
a business broker from 2008 until 2011. A lot of memories. I thought, you know, it’s
time for another autobiographical installment for my blog site. Basically after the financial
crisis of 2008 to 2009, it become very difficult in my finance brokerage business, I had to
give that up. Over half the companies that I was using to source capital from went out
of business during the crisis. Because they were packaging finance deals together in selling
them on your wall street and nobody wanted by that asset backed commercial paper as it
was known at the time. So I had met several different people who were trying to buy businesses
over that time. And I had run across a whole bunch of people trying to buy and sell businesses
as brokers who had absolutely no idea what they were doing. And I was getting a lot calls
from these very people who are trying to help their clients. Obtain financing again, not
having any idea what they were doing. Not that I was an expert at the time, about buying
and selling businesses. But I knew the money side of things and the financing part so I
meant a gentleman named Richard who owned a Sunbelt Business Brokers franchise. I talked
with him at length and I basically decided that I was a smart guy, I knew the financial
side of things and knew financial statements. I know about small business and that I could
probably make a go of it as a business broker and the reason why I chose to join up with
Sunbelt, was because they were large international franchise chain and they had the resources
to provide me with training. So I would actually have a training program, manuals with workbooks.
And there was an online program and their training led into the IBBA program and eventually
I got my certified business intermediary designation. So I decided to start with them. And basically
in the fall of 2008, started to work with some clients. One of my first client was a
guy, a husband and wife team, that had a building materials business. I went through the process
as it was taught to me and managed to sell their business in the closing date came in
February. So it was like literally a five or six months’ deal and I brought home a
nice big fat five-figure paycheck and it was you know seemed like great idea, seemed like
great money. So I started to do devote myself fully to the business brokerage career and
do reading and further training and then start on the path to my designation. In 2009, I
decided that would buy the Moncton, New Brunswick office of Sunbelt business brokers and by
that time there were a few associates that had joined the team. So I moved the business
to a new office and we had there was myself, three other associates as well as a front
office administration person and all things were humming. The problem with business brokerage
is that there are two distinct sales cycles. The first sales cycle is convincing business
sellers to list their business for sale with the brokerage cycle and there were some people
over the course of the years that I was doing this. That I spoke to over the course of two
years before they finally signed on with me and list their business for sale. So it was
quite frustrating and then the second sales cycle of course was selling the business.
So one of the very first people that signed on with me, was actually a friend chicken
franchise restaurant and that restaurant Would be the last business I sold in December of
2011. So I think I had listing file for almost three and a half years. Where I worked on
the file and didn’t make any money. Now the big problem with business brokerage as
a business model as far as I am concerned in this day and age is the fact that it is
largely a contingency revenue model. So when people listed their business for sale with
me. I would charge them an engagement fee. Which was money up front that demonstrated
number one that they were serious about selling the business and number two inputs of general
in my pocket. It was a little bit of cash for me to have to pay the bills. There were
several stretches when I owned the business brokerage where I went nine or ten months
without doing a single closing. So even thought I sold over 35 companies’ while I owned
on the brokerage there were times, where I would have like eight or nine months with
no income coming through the door. Except an occasional engagement free and what that
did for me personally it was awful. It meant that I couldn’t really create a budget at
home. It meant that I couldn’t plan financially for things that were to happen when a deal
did close and I brought in one of those paychecks and could have been 30, 40, 50, $80,000 and
all we do is pay off the credit cards and lines of credit and then I would be afraid
to spend money because I wasn’t sure when the next paycheck was going to come through
the door. So by 2011, I arrived at a point where that
summer I had six different deals that were set to close for the winter and I was confident
enough in the deals that were closing that I decided to take my family on a two-week
vacation to Florida. So I went on to Florida, we went to Disney World, visited all those
attractions and when I got back basically over the course of the next eight weeks. Three
of those deals fell apart. So one of them failed to go through because it was a regulated
industry and the government bureaucrat that was in charge of licensing, wouldn’t issue
a license to the buyer for whatever reason they had. So there was one deal fell apart
again buyer wanted to buy the seller wanted to sell deal was in place but a third party
tipped over my apple cart. Basically the second deal fell apart because a bank that an issue
to finance later rescinded it. So they changed their mind, they basically said yeah, we told
you we’re giving you the money. Now we’re not. And so again, buyer and seller wanted
to do a deal. The deal was in place. The deal fell apart because of a third party upsetting
the applecart, the third deal fell apart because of a franchisor. The buyer and seller, made
the deal they’re both very happy with the deal and then when the buyer started to have
meetings with the franchisor. The franchisor was a jerk to the buyer. And the buyer told
the seller said look man I love your business. I love what you done with it, I love the earnings.
I would love to be in this business but I will not get into business with those guys.
And so it was because the franchisor, the third deal fell apart deals four, five and
six went through as per the plan but instead of me ending up in December of 2011 with $100,000
of surplus funds in the bank and basically ended up at the end of 2011 with my debts
paid and a little bit of money in the bank. And it was around that time that my wife informed
me that our marriage will be ending. So there was all this personal stress at home. There
was the business stress of not being able to have regular, manageable, cash flow. And
I decided that was the time to pull the plug. I basically made to deal with one of my associates
that they would take over the franchise and you know it wasn’t like I sold the business
and got a big lump of cash or anything. Basically made a deal with him to sell the business
and get a cut off all the files that I had essentially opened in the years that I owned
the business and that was when I walked away from being a business broker and needed and
I knew that with the changes come in my personal life. I was going to have to get a regular
job and have some sort of stability to plan my budget things because you know two kids
to feed and wife that wanted out the deal. So that is my story that’s my life as a
business broker and I’ll tell you it was one of the most exciting period of my life
because there’s nothing more that I enjoy than trying to solve problems. Figure out
a way to make things happen and in that role, you’re basically constantly moving mountains
and trying to work things out between the buyer and the seller and I loved it. But at
the end of the day it’s just not an industry that I could make work for me. In the way
that I needed to. Anyway hope you enjoyed the story and we’ll
talk later. You made it into the video that’s great. Why not come over to my blog site: Where you can see all my latest posts and videos. You can also
take the time to watch my welcome video, see what I’m all about and if you wish sign
up for my email list. I only send one email each week. You get to choose which topics
you’re interested in so that you only get information that you want to learn about as
easy to unsubscribe anytime. Click my free resources link and have access to all of my
free eBooks, audiobooks and other PDF downloads. Thanks and we’ll see you next time.

Comments (37)

  1. I was wondering what happened , Thanks for sharing Dave…

  2. Great life/business story, Dave!

  3. Should've built a bigger pipeline. You wouldn't have had any ups and downs during your sales cycles. Also, most Sunbelts don't co broker limiting your ability to get deals done. Being an Elite Business Broker is one of the most rewarding careers in existence and one where you can do a lot of good for the entrepreneurial community. Your story illustrates lack of a pipeline and experience, spending money on deals before they're done. Your experience was horrible but with proper training you probably would've done well. You weren't getting landlords and franchisors and other entities involved early enough.

  4. Carry 30+ listings at any given point. Don't chase buyers let them chase you and get landlords, franchisors, attorneys, accountants and other entities like the government that's going to need to approve the deal early and often.

  5. sounds to me ike there was not enough of a safety net. if you can profit even a couple hundred thousand (and I know brokers that make more) And you can budget your life around lets say 100k, and you had a couple years (YEARS) of a safety net then the feast or famine of business would not make a bit of a difference. ou could literally get paid once a year only and it wouldn't matter. just budget for less than you make annually and you are fine.
    Another good way of doing it if you don't have a nest egg is if you are married or have another income and can live off of it until you get a decent average and know what kind of broker you are or how many deals you do.
    I think this is the reason you see older biz brokers in the industry.
    I guess my point os if you can make a few hundred thousand a year there should be no reason as to why you cannot budget a lifestyle.

  6. What a honest testimony….. Thank you for sharing

  7. Thanks for the video, Dave. I am a new BB associate and enjoyed both the good things you had to say about the position as well as the reality as to why it doesn't fit a lot of people due to the financial ups and downs. Great story. Thank you.

  8. I would just try to sell deals keeping a small royalty 2-5% (so small no one sees it ).

  9. That's not commission that's royalties. Royalties will keep money coming in when you are not selling or making a deal. like a franchise or how big investors do. Buy a company for a small amount, sell it but yet keep a 2 to 7% royalty from everything or stock or stake. What that will keep you with reoccurring money. Passivity!

  10. People build businesses and sell majority of the company all the time keeping a stake in the company for passivity. Receiving passive money eliminates the stress of not knowing when your next dollar will come in.

  11. I guess because of real estate I'm more a assignor than a broker. I assign contracts. I would probably only broker loans.

  12. Dave a good explanation of the business for those out there who would like to better understand the industry. In my opinion, if you go and work for the large franchise companies and they try and pin you to a 10-40% commission split you will almost certainly fail. Don't get sucked in to any company that will not pay you while you learn. At Playbook Corporate Advisory, Inc. ( I will not hire a broker who is on 100% only commission on day one. You will be an employee, you will get working draws, you will get profit sharing on all deals closed and originated and you will make money right away! I'm happy to share my experiences with anyone even outside the Chicago market. Good luck!!!

  13. David,

    Honest, open dialogue of the pitfalls of starting in the industry with less than 18-24 months of living expenses set aside. I started our business brokerage Jan 15th, 2009 on the tail of the financial crisis and have grinded it out for the last 8 years, simply refusing to quit no matter what. We now have 3 offices in Dallas, Frisco and Houston and closed our 100th transaction in 2015. I had to figure the industry out by failing and running into some of the exact pitfalls you described. I could relate to your story. You seem to have enjoyed the business tremendously. Give me a call sometime and lets chat!


    Michael D. Rubin
    MDR & Associates

  14. Thank you so much for your honesty. I was in a similar field and had to get out of it full time for the same reason. You can go several months with no income and your bills cannot wait so many months so get paid! It's a nice secondary revenue stream but when you work months to get a deal going and you have multiple ready to close in your pipeline and they all fall apart at the same time…it is killer.

  15. David – thanks for sharing. I have bought and sold a couple of my own businesses and wondered about doing it full-time. It's easy to be swayed by the big dollar amounts but like you, the uncertainty and uncontrollable aspects to BB is not a great foundation for me. It would be a case of "I'm passionate about being in business, but not passionate about the business I'm in"

  16. Awesome Testimony….I can tell that it was honest and true…
    I hope you find a better wife.

    Thank you for your courage to share..

  17. Hi David. Thanks for sharing. Having worked with you through your years as a business broker I can confirm that you were excited and thoroughly enjoyed helping business buyers and sellers to achieve their goals and you were very good at it. Unfortunately marriage breakdown makes it very difficult to maintain the optimism, enthusiasm, and self confidence required to be successful and the inconsistency in earnings does not help. Over the past 17 years with Sunbelt Business Brokers I have witnessed 4 marital breakdowns of Business Brokers (with the number of Sunbelt Business Brokers in Canada this is in fact well below the norm) and only one of these has continued their career as a business broker. The others have had to withdraw from such a demanding occupation to something less stressful that provided a more consistent income however every one of them still misses the excitement and the sense of satisfaction that the got through helping business owners to sell and helping now entrepreneurs to acquire a business that was right for them on the right terms.

  18. Great stuff. I would like to learn more about your current business model.

  19. Selling isn't matter of knowing the product is matter of knowing what you want and being passionate about… you are a desk profile, surely good at counting numbers but making the numbers is another game. You probably picked up partners with who you felt comfortable with… = not hungry sells people but well educated (too much maybe) and politically correct people looking for external validations more than for money… and set the 2008 crises environment I'm sure that you guys did your best to develop trust and ensure that you was "the good guys" more than being focus selling and closing deals.
    And sorry to say that but what's wrong with you ? you have good deals under your hand and you take vacation going to Disneyland instead of doing all the necessary to close it asap or open new deals ? This is the good guy syndrome… you felt sorry not providing enough to your family that you felt in obligation to take them vacation… WRONG (in the business point of view but not on the good dad point of view). Man forget balance and being a good guy if you want to do business that require 1000% dedication, specially on post 2008 crises so ZERO holidays and ZERO distractions (if you want to succeed). Sorry Dav if I jump at but I simply think you need to read that. ENERGY AND DEDICATION are the only think that matter, buying is an emotional process not a brain process… even in finance. Hope that can help you to address the real reason of why you didn't achieve what you want to. Davide

  20. An honest account of one's life. Thank you for your sincerity. Very rare

  21. it sounds like you were terrible with money. 30 40 50 60 70 80,000…??? you cant live on 30,000 a year ?? even if i did go 12 months without closing i could live off the bare minimum comission you got paid. you could have been really successful with cut backs. there are people who live off less then 20k a year . really almost everybody i know do not make 30k a year

  22. thanks for sharing sorry about the wife

  23. I was interested in one particular business listing from businessbrokers, an Emergency Clinic in Houston. To my surprise, they sent me a contract stating exclusive rights if I aquire any business related to that industry for 2 years. Is this a common practice? I declined to sign it.

  24. I am very impressed by your sincerety

  25. David thanks for sharing. I 'm interested in this business can you tell me how to get started in this industry?

  26. David, your story is very interesting. Thank you for sharing.

  27. I just started as an assistant to a business broker. We are struggling to find sellers. we are literally cold calling 40-50 people daily which is very draining and can be discouraging. We also do drop letters door-to-door 1-2 times a week. How do you build a bigger pipelines? how do you have a life in this business where you can never have saftey or reliable income?

  28. Great story ! i was with a start-up franchise called VR Business Brokers, as an agent. I joined because of their "slick, franchisey look" ..your know..the glitz, glitter, and fancy schmacy sales materials. ! The problem was that the franchise owners were seeking a "cookie cutter" solution which at the time, was largely handle by tough, "New York Tough-Guy Types", who were ruthless, (but successful ) business brokers who pioneered the BB industry in the metro Washington DC, Maryland, and Virginia corridor.. Both VR Business Brokers AND Sunbelt BB were BOTH were the new kids on the block, hoping to clean-up the "Wild West" , killer-style Business Broker environment in the tri-state area…
    They ALL tanked, mainly because they could not maintain the long dry spells of zero commissions…The Old BB Masters were slick and had standard commercial, residential real estate sales, in addition to property management income and rental properties. Since VR and Sunbelt were eager to hire account executives and ONLY focus on business sales, few field agents (if any) actually had real estate licenses, and this got us "newbies" salivating over the projected commissions…and into the field hustling (without having to wait for a real estate license)…Since we only could list the furniture, fixtures, leasehold and "blue sky", real estate deal "portions" of the sale was conducted by a co-broker deal with a licensed agent.
    I worked in 3 VR BB offices which simply "could not survive the heat !' I went to a Sunbelt BB..same problem..not enough sales…I finally tried two "blood and guts" old-time brokers..One had some major-league assholes (but effective)..The owner died and went to BB heaven I guess he he he..In desperation, I gave Business Brokerage one more shot..This "old time, down and dirty BB was run by a elderly Russian Jewish/Russian couple…they BOTH had escaped from the WW2 wars in Europe..and came to this country with Zero capital and 6th grade educations ! THe husband was a "take-no-prisoners" BB and would sue his dying grandma for a buck if need be….It was THERE that I actually got a sale..I listed a "nickle-and-dime grubby Chinese restaurant..This old guy sold the business in a week or so and said Robert.." It looks like ve haf some luck mit ze Chinese restaurant..come pick up YOUR part of ziss deal ! (in his charming Russian accent)..A $2500 commission check ! Sheeezam.! FINALLY..Hot damn !
    It took about 3 years grinding through "amateur hour" BB franchises to FINALLY score ! BUT my marraige suffered, as I had to work a regular job PLUS the BBs…"trying to make the wife proud "…but instead, created a marital "mine field"…!

    *Advice for "would-be" entrepreneurs….DO NOT GET INTO A MARRAIGE ….while trying to build a dream of fame and fortune.!..If you FAIL, your wife will despise and hate you, (REGARDLESS of your good intentions)…and sooner or later the mailman or the miikman (or both) will end up sampling your wife's "pastry" AND wearing your flip-flops !!…

    Bob Page
    Ex-Business Broker
    [email protected]

  29. Hello mr…. Merry christmas

  30. Been there almost the exact same situation as a small business owner you have my utmost respect David for putting that out there. And more importantly for turning things around thank you for all your videos

  31. I really appreciate your honest story. A lot of people in the brokerage industry are going or went through the same thing. Thank you.

  32. so you can buy a business with no money. The buyer bought your business with no money

  33. Thanks a lot for sharing that, David! Those issues are definetely worth considering when assessing these types of carreer options. I appreciate the honesty!

  34. I have 0% interest in business brokerage but I still watch your videos – because I get your life experience insights…

  35. I was a business brokerage in Cambodia since 2016 till now and i work if for full time career. but i think i still have many more step to learn to become a professional brokerage and selling my franchise. Please recommend me a good advice and partner .

  36. I think your mistake was taking that vacation, when you have deals about to close, I'm sure you no this by now, a picture say a 1,000 words the banks or companies may had PI'S follow ing you they do this Surveillance for a few reasons.

Comment here