I don't know if any business sellers read this

I don't know if any business sellers read this, but, if they do, I think it's important to see how the arithmetic works when dealing with a business broker. Keep in mind the broker's statement above, "The sell side broker is tasked with showing and convincing the seller that the business is actually worth X and not 2X which is no easy task." Meaning the broker's task is to convince the seller to sell it for half what they think it is worth.

Using Kendric's numbers above, let's see how good a deal this is for the seller. We can use any numbers, but let's make it easy, and say the seller is currently earning $20k per month, or $240k per year, adjusted. Kendric wants you to sell your company for $480k, or 2x the adjusted net.

With 50% down, and a 10% broker commission paid at closing, the seller nets $192k, less, say, $12k in closing costs, attorney and CPA fees. So the broker gets $48k, and the seller gets $180k at closing.

Then, the seller has a note, at 6% interest, that yields $4600 per month for 5 years. That's assuming the buyer doesn't run the business into the ground or have some other personal event happen that ends the payment stream prematurely. An actuarial cash value on such a loan? Maybe $120k

So, Mr. Seller, the broker is going to try to convince you to give up your $240k per year, and trade it for $180k today and $55k per year for 5 years. Not only are you giving up the perpetual earnings, but also the earnings growth (assuming you have a good company that can grow). Hopefully, your $240k would grow to $260k, $290k, $320k, etc.

You've just traded millions of dollars of future cash flow for a one-time payout of ~$300k. By the time it takes to train the buyer, you'd have made nearly that amount, anyway, and still have the company.

It's a ROTTEN deal for the seller, unless the company stinks. Consider installing a qualified, professional manager at $60k per year and keeping the cash flow in perpetuity.

I'll say it again: It takes no talent to sell a legitimate business for 2x cash flow. It's a no brainer for the buyer. But the broker will start working against you (the seller) during the listing period, trying to convince you to cheap-sell the company, so they can get the fat commission.

It's a great deal for the broker -- you paid them $48k on this sting.

Thank you for "educating" us, Kendric. I'm not laughing.