Ten Tips for Aspiring Intermediaries
When I decided to get into this business at the old age of 28, my only advantage was a full head of brown hair, a youthful charisma, a sharp analytical mind and a strong desire to succeed. I had spent the prior 10 years in academia in undergraduate and graduate studies in engineering followed by a brief stint in teaching. I had absolutely no knowledge of business and finance, and very, very minimal experience in sales. Starting in 2006, I was also jumping into a pool as the water was draining out the bottom. In fact, membership in business brokerage associations shrank 20-30% due to the Great Recession during my first 2 years.
Flash forward to today, at 41 years old with a little less hair, I co-manage a successful boutique firm and personally average about $20M a year in transactions while still mentoring under one of the hardest working people in the business. I’ve learned a lot watching other intermediaries, surviving through a tough recession, closing over 120 deals and building a practice over the last 10+ years. Here are my tips for aspiring intermediaries:
- Find one or more mentors. Find a successful intermediary (or two), tag along with him/her and listen far more than you speak. Crawl, then walk, and then run, skip and jump. One of the biggest mistakes people new to this industry make is assuming they can jump right in and be successful.
- Study, study and study more. Never stop sharpening your tools. In a business that requires knowledge of many disciplines and that theoretically serves across every industry and every size company, the learning opportunities are endless. Don’t forget to make money, but the more you learn, the more you can earn.
- Follow best practices. As they say, “don’t reinvent the wheel”. Participate in IBBA and M&A Source conferences to learn best practices. Two of the most important best practices are (i) only taking engagements with clients that have realistic expectations and (ii) putting in the work to create a comprehensive CBR/CIM. As for the former, we perform a thorough valuation analysis before taking a seller client, both to educate them and to make sure we’re in agreement on market value.
- Be disciplined in business development. Regularly block time in your schedule for business development; otherwise, you’ll be busy right up to the point where your pipeline runs dry. Once that happens, you might be under duress, frantically call prospects and scare them off by pushing too hard, too soon.
- Find a niche and master it. Specializing speeds up your learning curve and gives you an edge on competitors. Do the market research and pick a specialty that makes sense. Learn the industry lingo, financial model, valuation methods, lenders and key players and close a bunch of deals in that industry as quick as you can.
- Build your personal brand. Write articles, give presentations, whatever you can do to get known as the go-to expert. Publishing content on the internet is one of the fastest ways to build a personal brand. When you publish content, even on a blog, people reading it assume you are an expert – otherwise why would you be writing about the topic?
- Connect with centers of influence. Accountants, attorneys, lenders, heads of professional associations and even prolific buyers are all people in positions to provide you with market insight and send you business. Go out of your way to help them, or their clients, without expecting anything in return. In the long run, the payback will far exceed what you could have charged for your time.
- Don’t lose momentum. Momentum is critical in this business. Whether it’s getting a deal across the finish line, keeping your pipeline full or building your practice over the long run, always keep the car in drive with the peddle down. Time is the enemy and it doesn’t slow down, so neither can you.
- Prepare for the lows. The economy cycles roughly every decade. You may also have periods when your pipeline dries up. Budget well and plan for those periods but stay focused and keep the mindset that “failure is not an option”. Avoid getting sidetracked with other jobs or other businesses because you will lose the momentum (and income opportunities) and may never get it back.
- Play to win! If you’re not competitive, then this business is not for you. This is not a job where you can punch a clock and get a pay check. It’s more like a sport where you spend your waking moments thinking about the game. And like a sport, you need to set goals for yourself and keep moving the bar higher. If you do everything else on this list, you may just be surprised of what you can achieve!
Written by Michael Mensch, CBI, M&AMI
Agency Brokerage Consultants