The 7 habits of a high volume broker office

And the NUMBER 1 habit is:

Financing, Financing, Financing

By Stephen Mariani

If the law of retail is “Location, Location, Location” then the law of acquisitions is

“Financing, Financing, Financing”


In just the last few months I have had the pleasure of attending many broker conferences across the US and one thing that has really stood out this last year, there are lenders everywhere. Just a few short years ago I can remember being the only financing booth and now I am in the line of 10 or 12 lenders offering acquisition financing. Although not wonderful for us, it’s great for your business and we are always happy to see that. The lending markets continue to heat up every day and I am seeing them become more competitive on each deal, again, great news for buyers and your office representing the transaction.


Getting back to our higher volume offices around the country, the NUMBER 1 thing I see in common with every single office is they all utilize financing whenever it’s available. They have multiple financing sources and understanding the current lending criteria to a point. They already know what listings they have that can possible secure a loan and which ones will be seller or buyer financed only.


Today we will discuss why this is so important for those offices and how it benefits them to understand the conventional, equity investor, SBA lenders and any other possible financing options that make sense. These options change in the M&A markets to include larger insurance companies, VC money and others beyond my knowledge as this is not our area of expertise.


Financing can provide not a little more money or somewhat more, it can make you a lot more and I will tell you how. Typically I see the larger goodwill deals that attract the higher net worth borrowers who believe in the OPM (other people’s money) philosophy. This could be your executive type leaving the corporate world or maybe the business man that has recently sold a smaller company to get into something with higher cash flow levels. This type of savor, informed buyer knows more today than in years past partly due to the internet where information is everywhere. They understand the seller financing and costs associated with that (along with the strings) and the effects it could have on annual cash flow. They know that a 10 year loan as opposed to a 5 year seller note puts much more cash in their pockets and that’s what their looking for. So how does this play out? Is the buyer left out there to explore his or her financing options on their own? Do they play hit and miss with the newer, inexperienced lender? This is where you NEED to play a part in the buyers research and every high volume broker does. It begins by screening the business as soon as you sign the listing. The local lenders (or the 10 at the conference you just met) are begging for your transactions and brokers do the due diligence right up front. Exposing a 2 million dollar goodwill deal to a larger collateral lender just creates frustration for everyone and puts your transaction at risk. Many times when a buyer gets to us at Diamond he has explored 4 or 5 lenders and begins with “I don’t think anyone can do this loan but” which is not true at all. The real issue with this scenario is he has only been talking to conservative lenders that would not ever consider putting 1.5 million dollar goodwill loan in their lending portfolio. This happens much more than you would think and the real concern is the misinformation those lenders provide along the way. Rather than just tell the borrower that it does not fit their lending model, they go on to tell him that they don’t believe anyone would do such a loan. It makes sense that after hearing this 3, 4 or 5 times in a row that a buyer begins to doubt the business transaction itself and this is where you come in. You do not need to direct him or her to a specific lender (although this makes sense if the deal has been pre-qualified) but providing a short list of aggressive, goodwill lenders becomes a must. Having a relationship with lenders and understanding the criteria for each is a very smart idea to keep those negative comments away from a serious buyer.


We said this can make you more money but the above really shows how lenders can make more money. So what’s in it for you? Here are the top reasons this is critical to your success and DOES make you more money.

  • Keeps the deal on track and you updated as it proceeds through the process (much less fallout)
  • Reduces the down payment requirement and opens up many more buyer prospects
  • Keeps seller notes to a minimum or even eliminates them entirely (reducing the negotiating timeframe)
  • By being lender pre-qualified, instills confidence in a buyer that this is a viable business
  • And the NUMBER ONE way it makes you more money? The seller leaves the closing with the most cash possible and is greatly appreciative to you for setting this up—hence, does not consider renegotiating your broker fee.


I feel that number 5 above requires more explanation and unless you have been at a closing table and beat up at the 12th hour because the seller is financing the transaction and feels you are leaving with more than they are, it might not make sense. I have witnessed this too many times and NEVER believe in negotiating a broker commission. Diamond works with hundreds of brokers all over the country and knows more about the intermediary’s work than anyone. They are underpaid, if anything. Being exposed to so many we recognize and appreciate the hard work and thankless (typically) job they do.


To learn more about the most aggressive lenders in your area please feel free to visit the website and sign up for the local newsletter. Included in this newsletter are the lender volume reports by dollar. is always available for specific questions regarding this or other SBA rules.