I was on the phone with a gentleman who’s exploring the idea of becoming a business broker. He found my blogsite and some of my videos and wanted firsthand feedback about my experience when I was a broker from 2008 to 2011.
That conversation brought back a lot of memories—and I realized it was time to share another autobiographical installment. https://youtu.be/LsieCGOiS9I
Why I Became a Business Broker
After the financial crisis of 2008–2009, my finance brokerage business collapsed. More than half of the companies I sourced capital from disappeared. These firms had been packaging deals and selling them to Wall Street, and when that market froze, they vanished.
At the same time, I kept meeting people trying to buy and sell businesses often with brokers who had no idea what they were doing, especially when it came to financing. I wasn’t an expert in buying and selling businesses back then, but I did understand financial statements, deal structure, and money.
That’s when I met Richard, who owned a Sunbelt Business Brokers franchise.
Sunbelt appealed to me because it was a large international organization with structured training manuals, workbooks, online programs and a path toward IBBA certification. I joined, trained, and eventually earned my Certified Business Intermediary (CBI) designation.
Early Success and the Hook
In late 2008, I began working with clients. One of my first listings was a husband-and-wife building materials business. Five or six months later, the deal closed, and in February I received a five-figure commission check.
At the time, it felt fantastic.
I committed fully to business brokerage: more training, more reading, deeper immersion.
In 2009, I purchased the Moncton, New Brunswick Sunbelt office. We expanded into a new office with:
Myself
Three associate brokers
One administrative staff member
On the surface, things looked great.
The Two Sales Cycles No One Talks About
Here’s the reality most people don’t understand about business brokerage:
There are two completely separate sales cycles.
Convincing a business owner to list
Actually selling the business
I spoke with some owners for over two years before they finally listed.
Then, after listing, some deals took three to four years to close.
One of my earliest listings of a fried chicken franchise was one of the last deals I closed in December 2011. That file sat on my desk for almost three and a half years, producing zero income during that time.
The Fatal Flaw: Contingency Income
Business brokerage is largely a contingency-based revenue model.
Yes, I charged engagement fees but those only helped a little. There were stretches where I went nine or ten months without a single closing.
When a deal did close, the commissions could be substantial $30,000, $50,000, even $110,000—but those checks just went to paying off accumulated debt. Then I’d freeze again, afraid to spend, because I had no idea when the next deal would close.
There was:
No predictable income
No stable household budgeting
Constant financial stress
The Breaking Point
In the summer of 2011, I had six deals lined up to close in the winter. I felt confident enough to take my family on a two-week vacation to Florida.
When I returned, three deals collapsed within eight weeks:
One failed due to government licensing
One failed when a bank rescinded financing
One failed because the franchisor treated the buyer so badly he walked away
None of those failures were caused by buyer or seller behavior—third parties blew them up.
The remaining three deals closed, but instead of ending the year with surplus cash, I ended 2011 with my debts paid and very little left over.
At the same time, my wife informed me our marriage was ending.
That combination—personal upheaval and uncontrollable business income—made the decision clear.
Walking Away
I exited the brokerage by transferring ownership to one of my associates and negotiated a small share of future commissions from existing files. There was no big payout—just closure.
With two kids to support and major life changes underway, I needed predictable income and financial stability.
Final Thoughts
Being a business broker was one of the most exciting periods of my life.
I love solving problems. I love structuring deals. I love helping buyers and sellers reach the finish line.
But excitement doesn’t pay the bills if the cash flow is erratic.
For me, business brokerage—at least as it’s traditionally structured—wasn’t sustainable long-term.
I hope this behind-the-scenes look was helpful, especially if you’re considering the industry yourself.
Want deeper dives like this?
👉 Join my email list at DavidCBarnettList.com for early access to videos, insights, and 7 free bonus gifts.
No comments:
Post a Comment