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#412381 - 09/08/12 02:47 AM Exclusive Agent Agreement
Kristy32 Offline
Junior Member

Registered: 09/08/12
Posts: 2
Loc: California
I had signed an Exclusive Agent Agreement with an agent to sell my business about a month ago. Since then, my agent has not returned calls or replied back to any of my emails. Also, she hasn't given me any updates. I don't know what is going on with the sale of my business.

I want to cancel the exclusive agreement with her. Is is possible? I have another agent who was a serious buyer and can go through escrow as soon as I get out from my exclusive agreement.

My situation is that I have an agent who I worked with before hiring this new agent and she has a serious buyer who wants to buy my business ASAP. I can't sell it to her because of the exclusive agreement. I asked her to hold on to the offer though.

Is is possible for me to sell my business to my old agent after I cancel my agreement with her or do I have to wait for some period?

I am so deperate to sell my business but this agreement is stressing me out. Please help me with some suggestions. What should I do?

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#412402 - 09/08/12 05:15 PM Re: Exclusive Agent Agreement [Re: Kristy32]
DueDiligence Offline
Major Contributor

Registered: 12/05/06
Posts: 1635
Loc: Wild Wild West
With regard to your feeling that your current agent is unresponsive (which you translate as not doing his/her job), were your calls and emails basically asking for updates-- or did you have specific questions for the agent, or tasks that the agent needed to perform?

Was the agent negotiating with a buyer and you were checking on the progress? You say, "I don't know what is going on with the sale of my business". Is there a sale underway?

Nonetheless, regarding this "offer" from the old agent, read your Agreement with your current agent to see what you are required to do should an offer be presented to you and not through your Exclusive agent.

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#412409 - 09/08/12 08:09 PM Re: Exclusive Agent Agreement [Re: Kristy32]
super realtor Offline
Major Contributor

Registered: 05/01/05
Posts: 8596
Loc: georgia
Kristy,

If you are talking about just the assets of the business and not physical land or a building then it is not real estate.

What you are referring to is Business Brokerage.

In some states you do not even need to be licensed to help someone with the sale of their business.

So first off determine if it's your business you are selling only.When a person buys the business they take on the assets but not the corporation itself.You as a buyer want just the sales and the assets but none of the bills the previous owner has piled up.

You can sell your business right now.Typically in my area of Georgia a lower priced business (100k-200k) is a 10% commission.

Higher priced businesses go for 8% commission.It's all negotiable but those are the averages around here.Usually the fee is split between brokers so I don't know why this previous broker is saying they can't bring the buyer to you.

It's simple go to your broker and put the deal together and they split the commission.If you can't get in touch with your broker first look them up to see if they belong to the real estate commission and are licensed.If they are just an agent go to their head broker or if I believe California is a weird state where everyone is a broker.

If that's the case look up the principal broker and owner and contact them to explain your situation.

Typically sellers of businesses want 3 times net earnings.So if after expenses you profit 33,000 a year you want 99,000.A buyer wants to buy ideally at 2 times earnings say around 65,000 for that same 33,000 income stream.

If your sales are falling flat or the business is even or losing money then you are looking at an asset sale at 10 to 15 cents on the dollar.

Another key is if this new buyer will be hands on daily or an absentee owner?? If absentee they will have to hire a manager and pay them the salary you take if you run it yourself.That will reduce the profits you claim.

Example you work 40 hours a week as the owner and profit is 50,000 a year and you take 25,000. If I buy as an absentee owner and hire a manager I can only value the business on 25,000 profit or an offer price of 50,000 (2 times earnings) as I am too busy to run it day to day myself.It is just another investment stream for me I occasionally watch over.

The finance structure is key also.SBA financing takes a century to close and they have so much red tape it takes forever.Many businesses have a deal where the buyer puts down 40 to 50% and the current owner finances the note for say 5 years with a balloon due at the end.

If you are selling a restaurant then I wouldn't count your current profit model.Big restaurants have locked in fixed pricing contracts but the little guys do not.Food costs with the drought and beef and other items are supposed to rise substantially in the coming months.

As a restaurant owner the increases in food costs will not be evened out by a raise in menu prices because the consumer won't pay all of the difference.

As a buyer I would adjust all profit models on restaurants downward when purchasing to forecast reduced profits.

Hope all of this helps you out.I am commercial broker and investor so have a different perspective than just a broker/agent.

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#416090 - 11/26/12 08:24 PM Re: Exclusive Agent Agreement [Re: Kristy32]
Jack Liebsch II Offline
Member

Registered: 11/11/12
Posts: 35
Loc: Jupiter, Florida
Based on my personal experiences with business brokers, I would wonder why the agent with the serious buyer did not make any attempt to contact your listing broker. Does the exclusive agreement with the listing broker allow for a coop commission? Did you contact your broker and ask him to make contact with the broker who had the serious buyer? There is no reason why a deal could not have been arranged if a buyer truly existed.

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#416093 - 11/26/12 08:55 PM Re: Exclusive Agent Agreement [Re: Jack Liebsch II]
Jack Liebsch II Offline
Member

Registered: 11/11/12
Posts: 35
Loc: Jupiter, Florida
When I was selling a former business, I communicated with a few business brokers who often claimed they had a serious buyer interested in acquiring my business. However, when discussing terms with such brokers, they always state they required an exclusive listing agreement before bringing their client to the table. I would always tell them that I would gladly enter into a commission agreement with their brokerage for any specific buyer they would present but not an exclusive blanket agreement to represent me as the Seller. Surprisingly, the majority of those brokers with serious buyers never did follow through. I am pretty sure most were simply fabricating buyer interest in order to catch my business and tie me into an exclusive listing agreement. Eventually I gave into one broker who had a great sales pitch. He was very confident he could sell my business for what I thought it was worth. After he brought a few potential buyers by and a couple of weak offers, he then tried to convince me that I was asking too much and claimed my business was worth only half my asking price. When I did not agree, he stopped advertising my business and he stopped bringing potential buyers by.

Once the agreement expired and after educating myself on how business brokers operated, I performed my own advertising campaign using the same platforms business brokers utilized. I also sent a profile of my business to dozens of business brokers who serviced the area, along with a statement regarding my coop commission. I was able to attract far more interest for my business on my own as compared to the former business broker I had. Instead of a single exclusive broker bringing only his pocket leads, I had numerous brokers bringing a continuous stream of clients by. After a few months, my advertising located a buyer who agreed to a full price offer for my business with no broker involvement. Unfortunately, that offer eventually fell apart but after a few more months, I was able to negotiate a second full price offer with another buyer, who had his own broker. That deal made it to closing and I gladly compensated the Buyer's broker for his involvement.

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