I first met Josh Patrick in 2009 when I was writing a blog for the New York Times. We quickly connected based on our shared attitudes around small business — namely the need for owners to create a business with transferrable value, and to be more proactive about planning their eventual exit.

Josh is the founder of Stage 2 Planning Partners, a Vermont-based wealth management firm that focuses on the unique needs of entrepreneurs. He is also a prolific blogger and podcaster.

I’ve had the pleasure of being interviewed on Josh’s Sustainable Business podcast twice. During a recent interview he made the statement that most M&A people make him cranky. I chuckled because I’ve heard him say that before, but also because a lot of them make me cranky, too.

I decided to circle back with Josh and ask him to elaborate on what it is about M&A people that irks him. Following is our Email exchange:

BT: You said during a recent conversation that M&A people make you cranky. Could you share some of your main complaints about M&A folks?

JP: They make me cranky because the only solution for them is to sell the business, often whether the business is ready for sale.

There are also M&A people out there who charge a high fee to put together an offering memorandum knowing full well that the business is not salable. They are interested in getting a fee for putting together the memorandum and have no real interest in selling the business.

Often during the sales process the M&A advisor is pushing the owner to sell their business when it becomes clear that the business is not being sold for an amount that the owner was willing to take. I’ve seen M&A people get the seller to start spending their money so it becomes easier to get them to change to a non-advantageous place as a seller, meaning they will sell for much less than they expected and almost surely have sellers remorse after the deal is done.

I see too many business brokers not know anything about structured auctions. If a business is really salable, then it should also be a candidate and consider doing a structured auction. I’ve talked to a bunch of brokers who don’t know what a structured auction is, much less know how to run one.

Finally, and this goes with the above statement, the seller often is encouraged to keep going through the sales process when it becomes clear that it’s not in the seller’s best interest to keep going.

BT: This sounds like the proverbial “to someone with a hammer, everything looks like a nail.” What should business owners look for in an M&A advisor to avoid the situations you’re describing?

JP: (Josh listed seven things.)

  1. If the M&A group doesn’t charge for a book, then you should walk the other way.
  2. Get a list of deals and people you can talk to, and deals that didn’t work so you can talk to the M&A person.
  3. Make sure they’re a cultural fit for you and your company.
  4. When you interview them pay close attention to how well they listen and how good their questions are.
  5. Do some research on the sales process for selling your business before you talk to your first M&A person.
  6. Consider hiring someone who will represent you and not be involved in selling the business. This person’s job is to understand the process and coach you through it. This person should not have a success fee attached to whether you sell the business or not, but should understand how the process works and have walked others through it.
  7. Know whether you really want to sell your business and why before you even start down this road.

BT: I’ve thought for a long time that the business-for-sale industry tends to attract the wrong kind of people (i.e. high-pressure sales types looking for big commissions). What qualities do you think really good M&A people have in common?

JP: I think the nature of the beast requires that a good M&A person is pretty aggressive. They don’t have to be obnoxious, but they do have to be persistent. I also think the best M&A people I know are really good listeners. They find out what the motivations are for buyers and then sell to those motivations. Too often M&A people try to bludgeon buyers and don’t listen to the real reason they want to buy.

I also think good M&A people are good at choosing businesses to sell. They’ll be honest with potential clients and give them a well thought out idea of how salable their company is. They also don’t need to spend a lot of time figuring this out. If they look for the five or six things that buyers want and determine where the potential seller is on the continuum, the M&A professional would provide more value for their clients and even the clients they choose not to serve.

I would recommend all M&A people use Michael Port’s Book Yourself Solid program as a way to put together a business that serves the people they are meant to serve. I also would recommend that all M&A people read The Challenger Sale and adopt the strategies in the book.  If they did so, they would be providing a higher level of service to their clients.

BT: If you could name one thing that would make the process of selling a business better for owners, what would it be?

JP: Brokers and M&A people need to have honest conversations with their clients. The amount of distrust seems to build during the sales process and often by the end of it the seller ends up hating their broker because what they ended up getting was a big difference from what they were led to expect in the beginning.

Telling the truth is where I would start and be sure to have a conversation that talks about an honest appraisal of the M&A industry and where it doesn’t serve its clients in the best manner.

We agree with Josh! Hiring the wrong intermediary to help you sell your business can have both financial and emotional consequences. We’ve just created a comprehensive Guide on this very topic — Business Broker or M&A Advisor? How To Find The Right Pro To Help You Sell Your Business. Written specifically for owners of businesses with $2M to $30M in annual sales. Download our Guide now to learn the good from the bad, and avoid the ugly.

Continue the conversation on LinkedIn.

Author: Barbara Taylor

Barbara is co-founder of Allan Taylor & Co. and a former New York Times blogger. She has been a small-business owner since 2003. Barbara lives with her husband, Chris, and their two sons in Northwest Arkansas.