What have we learnt over recent weeks talking to our clients? The feedback we have received loud and clear, points fair and square at the fact that the Business Broking community as a whole needs to up its game in areas of professionalism and integrity. This is nothing new here you say and I agree, it’s not new. The majority of businesses sold in the NZ market are not sold via brokers; the majority it seems are sold by accountants and lawyers to their existing clients. It always puzzles me how they can represent both sides of the transaction impartially and how they hope to achieve a fair market value if it is not exposed to the market. Why do business owners go to their accountants primarily when they want to sell their business? An easy answer could be that they don’t trust business brokers to be professional enough to complete a transaction. It is also true that a number of accounting firms target business sales as another income stream.
Could it be that this lack of trust comes from the fact that the majority of Business Broking companies follow the Real Estate methodology, in bums on seats hiring policies, product positioning, product placement and the “dog eat dog agents crawling all over each other for deals” mentality? As I mentioned inlast week’s blog I still can’t see what benefit it is for me to have to have a RE sales persons certificate to sell a business in NZ (Somehow accounting firms seem to be able to circumvent this Act) and I see it as being even less logical for a business sales company to follow a RE companies methodology.
The Readers Digest publish each year "New Zealand’s Most Trusted Professions”on their website: New Zealand's most trusted professions 2009. Social commentator Emanuel Kalafatelis comments that “Kiwis fundamentally look to these professions for direction, guidance and protection”. As you would expect Firefighters, Ambulance officers, nurses etc make up the top spots because they obviously protect us, guide us and such but what position in the 40 positions listed would you see RE agents? The cynical among you might say 40th and you wouldn’t be far wrong. 36th position just above Politicians and Sex workers and just below Psychics/Astrologers! Are Psychics/Astrologers seen as professionals? Obviously the answer is yes, and more professional that RE agents.
Why would a Business Brokerage follow the RE model when these companies are thought of this badly? How can we hope to gain the trust of our clients when we are lumped into the same heap as RE agents? Trust is the key word here, there are excellent RE sales people operating very ethical and successful businesses throughout NZ, but if the market perception of the industry as a whole is as low as represented in this poll, those ethical agents should be asking the questions of their body as well. What do we do about it? I don’t know, maybe we will see more of the experienced brokers leaving the bigger companies and setting up for themselves. There have been a number do this in recent times, ourselves included. Maybe this is the way, smaller principal led companies operating more as boutique operations where quality or service will be the driver that determines success or failure. We also have to hope that the “bums on seats” methodology becomes harder to fulfil for the larger companies with less fly by nighters willing to take the plunge to be brokers in this current market.
Anyway what do you think? If you agree or disagree let me know by adding a comment below. If you are shy or you think I might know who you are just leave a nom de plume. Alternatively, you can email us your thoughts from the Contact Us page.
See you next week.