How to Evaluate a Business Broker Before You Buy a Business

 When buying a business, most people focus on the seller and the financials—but overlook a critical player in the deal: the business broker.

The wrong broker can delay or even kill a deal. The right one can help it close smoothly.

Don’t Go Around the Broker

If a business is listed with a broker, always go through them.

Trying to contact the owner directly can:

• Damage trust

• Create unnecessary friction

• Reduce your chances of completing the deal

Respecting the process keeps negotiations professional and productive.

Understanding the Broker’s Role

A competent business broker typically handles:

• Valuing and preparing the business for sale

• Marketing and finding buyers

• Assisting with deal structure and financing

In many cases, they act as an intermediary, advisor, and facilitator all in one.

The Two Types of Brokers

Not all brokers operate the same way.

Some act like “shopkeepers”—taking listings at any price and simply trying to match buyers.

Others act like “experts”—setting realistic expectations, guiding sellers, and ensuring deals are viable.

The second type is far more valuable to you as a buyer.

Why Expectations Matter

A well-prepared seller understands:

• What the business is worth

• What terms are realistic

• How deals are typically structured

If the broker hasn’t set these expectations, you may face:

• Unrealistic pricing

• Resistance to financing terms

• Deals that fall apart late in the process

How to Vet a Broker

Before engaging seriously, do basic due diligence:

• Review their background and experience

• Check their online presence and activity

• Ask about past deals and deal structures

• Listen for how they talk about pricing and financing

Strong brokers will provide clear, practical answers—not vague or evasive ones.

What Good Brokers Do Differently

A skilled broker:

• Sets realistic pricing with the seller

• Educates sellers on deal structures like financing

• Encourages reasonable offers

• Focuses on closing deals—not just listing businesses

This creates a smoother path for buyers to complete acquisitions

Key Takeaways

The quality of a business broker directly impacts your ability to complete a deal. Choosing brokers who set realistic expectations and understand deal structure will significantly improve your chances of success.

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Are FedEx Routes Good Businesses to Buy?

 A while back, I did a video about bread routes (or “bread routes,” depending on where you’re from). Since then, I’ve had a lot of comments and questions about FedEx routes. Are they good businesses? Are they like franchises? What are the risks?

I’ve actually evaluated a few of these businesses, so let’s break it down. https://youtu.be/lp6OB_8yRYI 

Are FedEx Routes Franchises?

The short answer: No.

A FedEx route is not a franchise. You’re not buying a protected territory like you would if you bought a McDonald’s or Subway franchise. Instead, you’re entering into a contract for services with FedEx.

Here’s what that means:

• FedEx hires independent contractors (corporations only, not sole proprietors or partnerships).
  
  

• You and your employees use your own trucks to deliver packages.
  
  

• FedEx pays you based on volume or mileage.
  
  

You are not buying a business opportunity from FedEx. You’re becoming one of their suppliers.

The Illusion of Buying a “Business”

Here’s where it gets tricky.

Contractors who’ve built profitable FedEx delivery operations sometimes sell those operations to other buyers. People pay big money sometimes millions for the trucks, employees, and the assumption of the FedEx contract.

But here’s the risk:

• The contract is renewed annually.
  
  

• FedEx can change the rules at any time.
  
  

• If they pull your contract, your business evaporates overnight.
  
  

At the end of the day, what you’re really buying is a business with one customer. And if that customer goes away, so does everything you’ve built.

The Risk of One-Customer Businesses

I’ve evaluated other courier operations that served multiple companies. For example, one rural delivery service worked with five different courier companies at once.

That business had:

• A built-in barrier to entry (no single courier had enough volume to go it alone).
  
  

• Diversified revenue (losing one client didn’t destroy the whole business).
  
  

That’s a real delivery business with intrinsic value.

A FedEx route? By contrast, you’re tied 100% to a single customer. That’s what we call customer concentration risk.

How to Protect Yourself if Buying a FedEx Route

If you’re considering buying one, you must structure the deal carefully. Here’s my rule of thumb:

• Down payment: No more than the value of the hard assets (trucks, equipment). That way, if the contract ends, you can sell the trucks and recover your investment.
  
  

• Goodwill: Should be financed by the seller through vendor financing. If FedEx cancels the contract, you’re not stuck paying off millions in goodwill that no longer exists.
  
  

• Payments: Tie them to the continuation of the FedEx contract.
  
  

Otherwise, you’re taking on massive debt for an asset that could disappear with one letter from FedEx.

Bottom Line

FedEx routes can be profitable but they’re not franchises and they’re not low-risk businesses.

They are supplier contracts with one customer. If you lose that customer, you lose everything.

If you’re going to buy one, make sure the deal structure protects you and that the seller shares the risk of FedEx changing its mind.

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– David C. Barnett