Can you trust business broker DD?

This topic contains 2 replies, has 3 voices, and was last updated by  Clifford Newton 2 weeks, 3 days ago.

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  • #115845


    Participant

    In acquisitions, the target company may often have business brokers or (agents) who are selling the company on their behalf. Given the extreme variance in requirements to become a business broker across the world in terms of: qualifications, skillsets, monitoring etc. As an acquirer, to what extent do you trust figures that are provided by a business broker who claims that they have conducted thorough DD on their client?

    #115849

    Paul Reed
    Participant

    No.

    I have serve as an business intermediary/broker for over 5 years now and would agree the qualifications for this industry are minimal at best and there are no self regulating organizations.

    Often these business broker positions entail simply attending a short few days of corporate training to give an overview of the transaction process.

    Intermediaries without additional education in the M&A or in financial analysis are not prepared to conceptualize or provide due diligence outside of a generic report on the business.

    Further, no intermediary should claim they have conducted a formal due diligence on any business.

    #115969

    Clifford Newton
    Participant

    Agreed. Do it yourself or don’t do it.

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