For local business buyers in the Triangle looking into buying an established business it may be more challenging than buying an already profitable and operational business in other markets of the USA. Many business buyers simply do not know where to start. Additionally, they may not know that business brokers are there to help.
This is because the state of business brokerage in the Triangle, and even more broadly in North Carolina, is not as advanced as the state of business brokerage in other states. The most advanced states for business brokerage are Florida, Texas, and California in 2018.
It may be a foreign idea for business buyers in North Carolina, but in States like these, the sale of a business is not that different than the purchase of a home. There are far more business brokers, and awareness of business brokerage, and support for business buyers in these markets.
In this humble business brokers opinion, there are two reasons for this, and they are related: The first is the history of business brokerage, and the second reason is Associations. Let’s explore both in this post:
Brief History of Business Brokerage
Businesses have been bought and sold forever, but the business brokerage profession was only formalized a few decades ago. My parent company, VR business brokers, was one of the first to formalize the profession and early leaders from my firm set out and formed the International Business Brokers Association (IBBA) which has become the standard bearer for codes of ethics, training, and certification for business brokers. The association is also focused on raising awareness of business brokers as viable options for business sellers when it’s time to sell a business.
” In addition to VR, there are other franchise business brokerage firms such as Sunbelt, Transworld, and Murphy Business Sales that have grown to support about half of all of the business brokers. These brands are comparable to the major franchises in real estate like Coldwell Banker, Keller Williams, Remax, and Century 21 in the Real Estate industry…
The interesting thing about all four of the major Business Brokerage franchise firms is that 3 out of 4 of them are headquartered in Florida. Business brokerage really took off in Florida several decades ago, and that’s one reason why Florida is one of the busiest places for business brokerage and, along with California and Texas. These states typically have more listings in BizBuySell’s annual “Insights Report.”
Professional Associations in The Business Brokerage World
Since the business brokerage industry is very similar to the real estate industry as a whole, it’s worth exploring how that more organized industry works… In the real estate world, the National Association of Realtors is the second largest spender on lobbying and helps shape the real estate industry in many ways.
In the business brokerage industry, there are some strong associations such as the Business Brokers of Florida, the California Association of Business Brokers, and the Texas Association of Business Brokers. In the Triangle, our regional association is the Carolinas and Virginia Brokerage Association. Instead of having an association for each state, we share an association across 3 different states. I’m on the board of the CVBBA, and it’s our goal to help educate and provide networking opportunities for our members.
Some of the larger associations have their own multiple listing services for businesses for sale. When multiple listing services exist, Brokers automatically have a pool of other brokers to share listings with to find buyers quickly. Multiple listing services in associations also provide guidance and how brokers work together, specifically co-brokering where a broker represents a buyer to buy a business from a separate broker representing a seller.
What This All Means for Business Buyers and Sellers in The Triangle
Because of the history of business brokerage and how associations affect how listings are distributed, North Carolina and our Triangle Market are catching up to other markets that have evolved more quickly with multiple listing services and strong associations.
We currently don’t have a “go-to” Multiple Listing Service specific to our market for business buyers, and there is very little buyer representation and co-brokering for “Main Street” businesses. In my opinion associations like the IBBA and the CVBBA have helped to raise awareness of how business brokers can help buyers and sellers, as well as distribute listings between brokers. One great example is the IBBA’s “Better with a Business Broker” campaign.
In States like Florida selling a business is almost as formalized as selling a house and business brokers are thought of just like real estate brokers. In North Carolina, we have a lot of work to do to get to that stage but I think we’re on our way. In the future buying and selling a business in the Triangle will be more common and easier as our business brokerage community continues to evolve, and buyers will have more support and access to more businesses and business brokers to help them on their entrepreneurial journey.
Neal Isaacs, MBA, CBI is a Business Broker and the owner of VR Business Brokers of the Triangle, located in Raleigh, NC. He writes about business and helps business owners discover their exit options.