The 7 Habits Of A High Volume Broker Office

The 5th Habit

Advertising And Your Listing Promotion

By Stephen Mariani

April 10, 2015

What buyers look for in your initial listing.


Buyers are searching online every single day looking for businesses and we understand that fact. This month we will discuss what we hear from buyers looking through the dotcom sites. What are they really looking for and what stands out as a “have to have” in a business listing.


The first thing we always explore with any potential buyer is location. Are they limiting themselves to a specific city, state, or area of the country? Or, are they willing to relocate wherever the business model they are looking for resides. Actually what we find more and more these days are that serious buyers and coming from all over and most are willing to move almost anywhere for the right opportunity. Back in the day a potential buyer would visit the local broker office in town and inquire about their current listings with very little exposure to businesses outside his area. Well, as we all are very aware of, times have changed and it is a get in the flow of things or get left behind. Just like much of our world, it is a new game and technology is at our fingertips. Up until now the above is no surprise (I could have written this 10 years ago), so what peeks a buyers interest in today’s online ads? Here is a short list of what we see many clients consider in those early stages of searching.


  • The cash flow or SDE. This is no surprise as it has always been the top item a buyer considers when searching and it is typically the first criteria entered into the search bar. They need to understand that this potential business can support the life style they have become accustom to living. By now they probably have a good idea of SDE to selling price ratios and can determine quickly how this business is priced based on current market conditions. They are much more in tune with financing options and the cost of money along with tax ramifications and the “bring home dollars”. We see more buyers focus on this as opposed to the actual industry itself in many cases. Our concern and focus then becomes resume’ and bringing the buyers skill level into the new company.
  • Location, Location, Location? Something that used to mean the world before when a buyer showed up at our door has dwindled down to number 3 or 4 on their list. We used to hear that staying near family, the water or maybe even snow mattered to a buyer. Well we see this much less important when we meet with a potential client that is looking for a business. It has become the first question we ask. What geographic location are you looking for? If they say a specific city then chances are they are not a serious buyer, if they say a state, well their chances just increased 10 fold. When they answer with the entire country it is at that point we know we will be working with this client and financing his new business.
  • Industry outlook. Who wants a pay phone business these days, anyone, anyone? Of course not and why would they. Yes, there are actually a few left in the country but would anyone buy or finance one, no way. The second thing potential buyers do is a search on the industry and latest news surrounding it. When it comes to in-home health care you can find all kinds of articles written and laws that have changed over the years in each of the states. This is the kind of information many buyers bring us and ask how lenders view these changes. We have witnessed government software changes (it delayed payments to these businesses for almost 60 additional days) that affected every one billing Medicare at the time, I think that was 2008. Bottom line on industry outlook is do these searches yourself and be proactive, have the answers before their asked by a buyer especially if the business has big price tag. It doesn’t take long and you will be able to address any concerns so the buyer can put those behind and focus more on the operation of the business.
  • Available financing options. OK, here is where the rubber hits the road. Every buyer (well, almost every buyer) wants to leverage their assets and buy the most business they can afford. In today’s world where everything is bought on credit, why would a business be any different? We almost never see (or even hear of) a true cash buyer on larger acquisitions. So buyers begin many conversations with us by explaining that the “seller is willing to hold a note for the right buyer”. To be completely honest, we are fundamentally against seller notes and here is why. Seller financing does not help anyone! That’s right, I said it and will say it again to every potential buyer I talk to. That being said, I do support it under the right conditions and for the right reasons. By now you should be confused on where I stand regarding the seller financing piece so I will clear this up. If the seller financing portion is NOT being used to assist a buyer with his down payment (meaning on full stand by for 24 months or more) then it is typically costing him more from his annual cash flow or SDE. If a buyer makes less money annually because of the shorter term on the seller note, Yes, I am against it. With the seller note typical on 3 or 5 year terms and SBA 7a term is 10 years it becomes a math problem that is pretty easy to solve. More loan and less seller note equals higher cash flow to a buyer.  But don’t take that out of your listing. Buyers like to see it as it does give them a sense of seller confidence in that business. What really helps provide confidence is a “This business is pre-approved by an SBA lender”. This instantly gets many buyers attention because now they understand that an independent third set of eyes has reviewed the financials and believes they can support not only the debt service but the selling price, a win-win. We always suggest doing this when possible on each and every listing you have and most lenders will jump at the chance.


So, Where should you place your listing? Everywhere! Although we do not recommend any particular website, we do see many buyers send us listings from the national, well known sites. It may be expensive these days to list on multiple sites but we see them come from all over. Typically if they are looking in Florida, it will come from the Florida listing site. We always recommend all the sites that searches come up with when you type in “business acquisitions in X“(state). These days the search is not limited to one or two websites anymore and a buyer has the entire web to choose from. One important thing to remember is to be consistent so the buyer sees the same price on all the sites and if the price needs to be adjusted, adjust them all.  When my career began the search was limited to newspapers and print ads but who knows what the future brings as search options. It’s not so simple these days but part of the job.


The goal of every listing is to give just enough information for the potential buyer to want to pick up the phone, email you or contact you by whatever method is available today. is always available for specific questions regarding this or other SBA rules.