Latest / The Buyer & Seller Podcast with Fexingo: Business Brokers, Exits, and Private Sales Explained / Why Business Brokers Return Your Call Last
Transcript
- Lucas: You call a business broker. Leave a voicemail. And then you wait. Maybe a day, maybe a week. Maybe they never call back. Luna: And you're left wondering — did they get my message? Was my business too small? Did I say something wrong? Lucas: Right. So today I want to pull back the curtain on exactly how brokers triage their leads. Because it's not random. There's a real hierarchy, and once you understand it, you can work the system. Or at least stop taking the silence personally. Luna: Before we go deep on the hierarchy — I want to mention something quickly. This show is ad-free, and that's only possible because a small group of listeners chips in monthly at buy me a coffee dot com slash fexingo. If these conversations have moved your thinking forward in some way, that's where you can keep the engine running. Lucas: And it genuinely makes a difference. So thank you to everyone who already does that. Now — let's talk about who gets called back first. Lucas: I spoke with a broker in Cleveland who handles deals between five million and fifty million dollars. He told me he gets about forty inbound leads a week. He personally calls back maybe six of them. Luna: Six out of forty? That's brutal. So who are those six? Lucas: First priority: sellers who are ready to transact now. And 'ready' means they have audited financials for the last three years, a clear understanding of their EBITDA, and a signed confidentiality agreement already on file. If you call with that package, you're getting a callback within two hours. Luna: So it's not about the size of the business as much as the preparation? Lucas: Size matters, but preparation matters more. The broker told me about a $12 million industrial coatings distributor that came to him with messy books — no audit, just a tax return and a shoebox of invoices. That call went to voicemail for three weeks. Lucas: Meanwhile, a $4 million software company with audited statements and a clean cap table got a meeting the same week. The broker knew he could put that package in front of buyers immediately. Luna: So the $12 million company with sloppy books is actually a harder sell than the $4 million company with clean records. Lucas: Exactly. And the broker's time is finite. He's going to chase the deals he can close fastest. The $4 million clean deal might close in six months. The $12 million messy deal could take two years — if it closes at all. Luna: What about buyers? Where do they fall in the hierarchy? Lucas: Buyers are almost always lower priority than sellers. Because brokers are paid by the seller — typically a percentage of the sale price. So the seller is the client. The buyer is the counterparty. Lucas: That said, there's a sub-hierarchy for buyers. The broker I spoke with puts institutional buyers — like private equity firms — at the top. They're credible, they have deal experience, and they can move fast. A first-time buyer with no track record and no financing lined up? That call gets returned last. Luna: So if you're a rookie buyer, what's the smart play? Lucas: Get a pre-approval letter from a lender. Or better yet, bring a letter of intent from a co-investor. The broker needs to know you're not going to waste his seller's time. If you show up with proof of funds and a clear acquisition criteria — industry, revenue range, geography — you jump the line. Luna: And if you're a seller who doesn't have audited financials? You're stuck? Lucas: Not stuck, but you need to be realistic. The broker may still take you on, but you'll be in the 'work in progress' pile. He'll ask you to get your books in order before he starts marketing. And if you push back on that, he may pass entirely. Lucas: The broker in Cleveland said he's turned down sellers with perfectly good businesses — profitable, growing — because the owner refused to hire an accountant to clean up the financials. He said, 'I can't sell a mystery box.' Luna: That's a great line. 'I can't sell a mystery box.' So the takeaway is: preparation is the single biggest lever you have. Lucas: And it's not just financials. The second biggest lever is a clear story. Why are you selling? If the answer is 'my industry is dying' or 'I'm burned out', that's a red flag. If the answer is 'I want to pursue a new venture' or 'I'm retiring after thirty years', that's a green flag. Lucas: Buyers are buying future cash flow. They need to believe that cash flow will continue after you leave. If your reason for selling suggests the business is fragile, the broker knows that deal is harder to close. Luna: So the broker is essentially pre-vetting the story as much as the numbers. Lucas: Exactly. And this is where a good broker earns their fee. They coach the seller on positioning. But they won't take a client who needs too much coaching — because that time could be spent on a client who's already ready. Luna: Let's talk about the bottom of the hierarchy. Who gets ignored entirely? Lucas: The broker said there are three types of calls he never returns. One: someone who just wants a valuation with no intention to sell. Two: someone who says 'I'm not sure I want to sell, just exploring.' Three: someone who starts the conversation with 'I want at least ten times EBITDA' without any understanding of what their business actually earns. Lucas: That third one is surprisingly common. The broker said he gets calls every week from someone who read about a tech company selling for ten times revenue and thinks their plumbing supply business should get the same multiple. Luna: So unrealistic expectations are a deal-killer before the conversation even starts. Lucas: Exactly. The broker's time is the scarcest resource in the deal. If you waste it, you're out. And word travels — brokers talk to each other. A reputation for being difficult or unrealistic can follow you. Luna: Is there any upside to being a smaller seller? Like, maybe a smaller broker will give you more attention? Lucas: Absolutely. The broker in Cleveland only handles deals above five million. But there are brokers who specialize in Main Street — small businesses, a few hundred thousand to two million. Those brokers have a different triage system. They might be more willing to work with a seller who needs financial cleanup, because the deal size is smaller and they have more capacity. Lucas: But even then, the same principle holds: the prepared seller gets called back first. I talked to a Main Street broker in Atlanta who handles bakeries, laundromats, auto repair shops. He said his number one priority is sellers who have a current profit and loss statement and a list of assets ready to share. Luna: So it's the same dynamic at every scale: preparation beats size. Lucas: Right. And I think the broader point is this: brokers are not gatekeepers trying to keep you out. They're salespeople trying to close deals. Their triage system is designed to identify the deals they can actually complete. If you understand that, you can position yourself as the kind of seller or buyer they want to work with. Luna: So if someone's listening right now and thinking about selling their business in the next year, what's the one thing they should do this week? Lucas: Get your financials audited. Or at least reviewed by a CPA. And start tracking your EBITDA — adjusted for owner perks, one-time expenses, and non-cash charges. If you can hand a broker a clean three-year history, you will not be sitting in voicemail jail. Luna: Voicemail jail. I like that. Alright, that's a concrete takeaway. Thanks Lucas. Lucas: Thanks Luna. And for everyone listening — whether you're buying or selling, the principle is the same. Be ready before you make the call.