If you’re a business owner, you’ve probably received cold outreach that sounds like this:
“We have a buyer interested in your business.”
Flattering? Maybe. Exciting? Possibly.
True? Almost certainly not.
As business brokers ourselves, we believe transparency builds trust. The best way to earn yours is by exposing the misleading tactics plaguing our industry—so you can spot them before they waste your time.
Four Red Flags Every Business Owner Should Recognize
- “We Have a Buyer for Your Business” (Translation: We Don’t)
This is the industry’s most overused—and misleading—opening line.
Here’s what brokers actually have: databases of people who want to buy a business. Not your business specifically.
Think about it this way: would you list your house because a real estate agent said they had “someone interested in buying a house”? Of course not. You’d expect them to show genuine interest from qualified buyers who’ve seen your property details.
The same standard should apply to your business. Until a buyer has reviewed your financials, understood your market position, and assessed the risks, any claim about their interest is premature—and manipulative.
- Instant Valuations Without Data = Instant Red Flags
If a broker quotes you a price without requesting:
- Profit & loss statements
- Tax returns
- Adjusted EBITDA or seller’s discretionary earnings
- Market comparable sales
Walk away immediately.
Business valuation requires both analytical rigor and market expertise. Real brokers invest time to:
- Recast your financials to show true profitability
- Research comparable business sales
- Analyze debt service coverage for realistic financing scenarios
- Explain how different deal structures affect your final proceeds
Without this foundation, they’re not providing a valuation—they’re making a sales pitch.
- One-Page “Valuations” with Zero Support
Some brokers do provide valuations, but they’re often single-page documents with a number and no explanation.
Before accepting any valuation, ask:
- Where are the comparable sales that support this price?
- How was goodwill calculated?
- Would banks finance a deal at this valuation?
- What debt coverage ratio does this price support?
If they can’t answer these questions clearly, they’re not preparing you to sell successfully—they’re just trying to win your listing.
- They Don’t Know Your Market
This red flag is subtler but equally damaging. Brokers from different regions often miss crucial local factors:
- Prevailing wage expectations
- Regional buyer preferences and behaviors
- Local real estate values
- Industry dynamics specific to your area
A logistics business in Denver has different operational requirements than one in rural Iowa. A medical spa in Chicago serves a different demographic than one in Cedar Rapids.
These regional nuances directly impact pricing strategy, marketing approach, and buyer pool. Working with someone who doesn’t understand your market is like hiring a tour guide who’s never visited your destination.
What Excellent Business Brokers Actually Do
The right broker will:
Start with Discovery, Not Sales They’ll spend time understanding your business, goals, and timeline before discussing representation.
Provide Detailed, Defensible Valuations
Complete with comparable sales, methodology explanations, and financing feasibility analysis.
Demonstrate Market Knowledge They should understand your industry dynamics and regional market conditions intimately.
Explain the Process Honestly Including realistic timelines, potential challenges, and what success looks like for your specific situation.
Tell You Hard Truths Sometimes your business isn’t ready to sell, or market conditions aren’t optimal. Good brokers will tell you this, even if it costs them a listing.
The Bottom Line
Selling your business is likely a once-in-a-lifetime transaction. The financial and personal stakes are too high to entrust to someone who leads with misleading claims and empty promises.
Don’t be impressed by brokers who claim to have buyers lined up or throw out valuations after a five-minute phone call. Be impressed by those who ask thoughtful questions, demonstrate genuine expertise, and respect the significance of what you’re considering.
Your business deserves better than a sales pitch. It deserves a strategic partner.
When you’re ready for that kind of partnership—with someone who actually knows your market and values transparency over tactics—let’s have a real conversation about your goals and options.
