MEDIA RELEASE

9 March 2011

More choice now in Business Broker community

The following is the opinion of David Newport, a director at business brokers Switch Business:

Too often we hear horror stories of vendors' dealings with Cowboy Brokers which besmirch all brokers and the industry as a whole. There are ludicrous requirements for business brokers to complete a 'Real Estate Agents Salespersons Licence' which is a 12 paper course with not one mention of business broking.

We currently have an experienced sales person who is about to start an internship with Switch Business to sell franchises. He is currently enrolled in a correspondence course to complete this licence and is greatly frustrated that when he qualifies, he then will have to actually start learning about the business of business broking.

So what do we get when newbie brokers complete this course? Real estate sales people, who are no good to you whatsoever when you come to sell your business.

We looked at an industrial machinery sales/hire business recently. We appraised the business and come up with what we believed to be a fair representation of a Fair Market Value in the range of $3-3.5m.

Another brokerage better known for smaller transactions, and not really understanding the complexity of the business, informed the owners that they believed the business to have a market value of $6m. Their reasoning was that the two owners' remuneration and depreciation weren't a cost to the business and therefore a multiplier of four was appropriate on the right
track.

ends