When looking to hire either a business broker or a business advisor, the difference between the two may not always be made clear to you.
While these professional services are often considered one in the same, the differences are actually quite dramatic, but also nuanced. So, make sure you watch this video before hiring a business advisor or broker.
In this video, you’ll learn about the different incentives brokers and advisors have, how the two approach a deal, and how they manage the ongoing terms of your contract. All of which will massively affect the ultimate outcome of your deal.
Want to learn more about how Molliter Advisory can help you? See our M&A services.
Transcript for “What’s the Difference Between a Business Broker and a Business Advisor?”:
Now, sometimes getting the deal done doesn’t always mean that the client, you, got the best deal.
It just means that the deal got done and the broker got paid. An advisor takes a little bit of a different approach.
He’s your advocate. He finds things that may even jeopardize getting the deal done or at least getting the deal done now.
These aren’t things that brokers really want to talk about, nor do they really want to embrace them with you.
But an advisor is going to take a long, hard look at this and confront you with some things that you may not want to handle, that he knows it’s going to come up at the closing table.
There’s a scrutiny that comes through the due diligence process that a lot of people avoid or they think that no one will ask those questions.
An advisor will make sure to be prepared or make sure that you are prepared when those questions come up, because he’s seen deals get queered at the end because there was a fact that wasn’t shown because they didn’t think anyone would ask that.
Advisors know these things. When you have deals that are prefaced on earnouts, things that get paid out over time, clawbacks, that sort of thing, well, the broker’s already been paid by the time those functions start coming into play.
And when that calculus is put in force, a year later when the accounts didn’t pan out or a year later when the employees didn’t pan out, he’s not there to help you deal with the settlement that might occur.
An advisor will advise you from the very beginning how best to structure those elements within the contract.