IBBA Insights Winter 2023

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A Q u a r t e r l y D i g i t a l P u b l i c a t i o n o f t h e I n t e r n a t i o n a l B u s i n e s s B r o k e r s A s s o c i a t i o n

T H E B E S T I N S I G H T S O N B U Y I N G A N D S E L L I N G S M A L L B U S I N E S S E S

Reflecting on

Our Journey and

Looking Ahead

By Kyle Griffith,

2023 IBBA Chair

The insights and opinions expressed herein are those of the authors and do not represent professional counsel nor an endorsement by the IBBA.

W i nte r 2 0 2 3

Plus Insights on:

+ Emotions in Business Brokerage

+ Risk Management

+ Due Diligence

+ Legislative Update

and More!

WINTER 2023

The best insights

on buying and selling

small businesses

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12

16

20

24

LETTER FROM THE CHAIR

ADDRESSING EMOTIONS IN BUSINESS BROKERAGE

MASTERING THE ART OF RISK MANAGEMENT

THE PIVOTAL ROLE OF THOROUGH DUE DILIGENCE

IN BUSINESS BROKERAGE

A GUIDE TO THE NEW 2023 SBA SOP

LEGISLATIVE UPDATES

In this Issue

WINTER 2023

As we navigate through the closing months of

2023, it ofers us a moment to pause and reflect

on the year that has been and the exciting

possibilities that lie ahead. Te journey through

2023 has been a testament to our resilience,

adaptability, and the collective strength that

drives our profession forward.

A YEAR OF UNPRECEDENTED GROWTH AND

ACHIEVEMENT

This year has been extraordinary for the IBBA.

We achieved a historic milestone, with our

membership reaching an all-time high of 2,879

members. This growth signifies more than just

numbers; it represents the expanding influence

and value we bring to the business brokerage

community. Each new member enriches our

community with diverse experiences and

perspectives, strengthening our collective

knowledge and capabilities.

IBBA ACHIEVES RECORD-HIGH MEMBER

SATISFACTION IN 2023

This year marks a significant achievement in

member satisfaction within the IBBA, as we’ve

reached the highest Net Promoter Score (NPS) in

our association’s history. The NPS, a key metric

for measuring customer loyalty and satisfaction,

stands at an impressive 67.4% for 2023. This is a

remarkable feat, especially when considering the

historical data: from 19% in 2015, steadily climbing

through the years to surpass our goal of 50%.

The NPS is a crucial indicator as it reflects the

likelihood of our members recommending our

association to others. In the context of varying

industry standards, where a 2003 study showed

a median NPS of 16% across multiple industries,

our score of 67.4% is not just a milestone but a

testament to the value and excellence we deliver

to our members. Achieving such a high score

underscores our commitment to providing

outstanding education and support, and it speaks

volumes about the trust and confidence our

members have in the IBBA.

THE BACKBONE OF OUR SUCCESS: CERTIFIED

BUSINESS INTERMEDIARIES

Our Certified Business Intermediaries (CBIs)

continue to set the standard for excellence. With

a robust count of 487 CBIs, we demonstrate

professionalism and expertise, underscoring the

KYLE GRIFFITH

CBI, CM&AP | 2023 IBBA Chair

Embracing Resilience and Growth:

Reflecting on Our Journey and Looking Ahead

depth of talent within our ranks. Our CBIs play

a critical role in upholding our reputation for

quality and integrity in the business brokerage

community.

FORGING STRATEGIC PARTNERSHIPS

This year, we partnered with the Texas

Association of Business Brokers (TABB).

Anticipated to bring in an additional 120

members, this strategic collaboration, set to roll

out in January 2024, marks a significant step in

our journey toward nationwide cooperation and

growth. This partnership is a testament to our

commitment to building more robust networks

and enhancing member value.

CHAMPIONING DIVERSITY AND INCLUSION

In our commitment to fostering a more inclusive

and dynamic business brokerage community, we

launched a new student scholarship program to

increase the number of young minorities in our

profession. A�racting younger, diverse individuals

is crucial for bringing fresh perspectives and

ideas, enriching our profession, and aligning

with our vision of creating robust economies and

communities.

HISTORIC CONFERENCE SUCCESS: A

MILESTONE EVENT

Our May 2023 conference was a landmark event

in IBBA’s history, a�racting 900 a�endees—the

largest in our history. This gathering wasn’t

just about numbers; it was a vibrant forum for

exchanging innovative ideas, best practices, and

strategies. The conference’s success illustrated

our unwavering commitment to providing top-

tier educational opportunities, fostering a strong

community, and se�ing industry benchmarks.

RECOGNIZING EXCELLENCE: CELEBRATING

OUR MEMBERS’ ACHIEVEMENTS

At our 2023 Annual Conference, we recognized a

record number of award recipients from over 1,800

deal submissions. This year’s awards were notably

diverse, with many female business brokers recognized,

highlighting their vital role in our industry.

There were 240 awards handed out to a total of

194 unique members. Each award won symbolizes

hard work, persistence, and professional excellence,

reflecting the growing recognition of business

brokers in successful business transfers.

ADVOCACY IN ACTION: THE BROKERAGE

SIMPLIFICATION ACT

This year’s key milestone was the passage of the

Brokerage Simplification Act. This landmark

legislation introduces a new exemption for M&A

Brokers, exempting brokers from securities broker

registration under the Securities Exchange Act of

1934. Due to this new exemption, hiring business

brokers and M&A advisors to sell companies has

become more affordable for business sellers. This

exemption also gives the business owner more

flexibility in deciding who will represent them in

the sale of their business.

LETTER FROM THE CHAIR

WINTER 2023

LOOKING AHEAD: BUILDING ON OUR SUCCESS

As we look to the future, these achievements

provide a solid foundation to build on. Our

increasing membership, the diversity within our

ranks, and the success of our annual conference are

just the beginning. The year ahead holds immense

growth, innovation, and success potential.

We will continue to focus on expanding our

educational offerings, enhancing our regional and

national events, and fostering a community that

supports and upli�s each other.

We aim to maintain and build upon our success,

creating an even more robust and dynamic IBBA.

A CALL TO CONTINUED ENGAGEMENT

AND GROWTH

I urge each of you to stay engaged with our

community. Please take advantage of the learning

opportunities, a�end our conferences and regional

events, join a commi�ee, and participate actively in

our various initiatives. Your involvement is crucial

to our continued success and the advancement of

our profession.

APPRECIATION FOR THE PILLARS OF OUR

ASSOCIATION

As I reflect on my tenure as Chair, I extend a

heartfelt thanks to the dedicated management and

staff of the IBBA, whose tireless efforts have been

the backbone of our association’s achievements.

Your hard work, unwavering dedication, and

relentless pursuit of excellence have not gone

unnoticed and are deeply appreciated.

To all the volunteers who have generously given

their time and expertise, your contributions are

invaluable. You are the unsung heroes who help

drive our initiatives and programs forward, and

your commitment is a testament to the strength of

our community.

And to my fellow board members, your collaboration

and support have been pivotal in our journey

together. Your insights, guidance, and leadership

have been crucial in steering the IBBA towards new

horizons and successes. Together, we have faced

challenges, celebrated victories, and continually

pushed the boundaries of what we can achieve.

A special acknowledgment goes to Randy Bring,

my predecessor, whose guidance and leadership

have been instrumental in shaping the success we

enjoy today. As we look toward 2024, I am pleased

to welcome Pino Bacinello as the incoming Chair.

Under his leadership, I am confident that we will

continue to thrive, embracing the new challenges

and opportunities that await us with the same

resilience and determination that have been the

hallmark of our journey together.

Thank you for your unwavering support of the

IBBA. Here’s to a brighter and more prosperous

future than ever, driven by our collective efforts and

shared vision.

KYLE GRIFFITH | CBI, CM&AP

Chair of the Board of Governors International

Business Broker Association (IBBA)

Managing Partner

The NYBB Group

SEE REPORT

Get the insights you need into Main

Street and Lower Middle Market transactions

with the Q3 2023 Market Pulse Report!

WINTER 2023

WAYNE WRIGHT

CBI, CM&AP, MCBI

Addressing Emotions

in Business Brokerage

If you have been a business broker for a

significant amount of time, you are likely aware

of the constant emotional challenges we face in

Main Street and lower M&A. We ofen deal with

inexperienced buyers and sellers, where some

sellers are deeply atached to their businesses

while others can’t wait to exit them. You’ve

probably come to understand that a deal ofen

falls apart multiple times before it finally crosses

the finish line to closing. In the world of business

brokerage, it can be unrealistic to expect our

industry to become less emotionally demanding,

especially considering the ongoing uncertainty

in our world and the unique challenges brought

about by our evolving economy, notably in the

afermath of the COVID-19 pandemic.

Consider the events of this year alone. At the

outset, I successfully facilitated two substantial

transactions, one of which amounted to nearly $3

million. Concurrently, I had ongoing dealings from

the previous year that carried into this one. There

was a sense of optimism that 2023 would go down

in the books as a remarkable year, prompting

thoughts of indulging in a well-deserved treat.

However, as we progressed into the third quarter, a

series of setbacks unfolded. A significant business

deal, involving a $5 million transaction, faltered

several times during the due diligence process. On

the third a�empt, just when it seemed like success

was imminent, the SBA lender unexpectedly

flagged the buyer’s high debt-to-income ratio. This

led to a demand for the liquidation of another

property, a condition the buyer was unwilling to

meet. Consequently, the same business suffered

another blow when a major supplier relocated

outside the U.S., resulting in a substantial decrease

in its value and necessitating its withdrawal from

the market.

On a different front, another business this year

encountered a unique challenge. Despite its

thriving status, it was temporarily removed

from the market with the decision to await the

completion of its 2023 taxes. The plan is to relist

it next year with the anticipation of significantly

increasing the asking price.

Tere was a sense of

optimism that 2023 would

go down in the books as a

remarkable year, prompting

thoughts of indulging

in a well-deserved treat.

However, as we progressed

into the third quarter, a

series of setbacks unfolded.

WINTER 2023

Furthermore, a business that should have

concluded earlier this year faced complications

with the landlord, lease, and hurdles in obtaining

a liquor license. Obstacles were continually

arising, creating a series of challenges for its

successful closure. In just three months of the

year, my confidence had soared, and I was on

top of the world, only to experience a sharp fall

from success to adversity. Can you relate to this

rollercoaster scenario?

I once came across an article that mentioned nearly

half of all entrepreneurs are affected by at least

one mental health condition, such as anxiety, ADD,

bipolar disorder, and more, and about one-third

of them experience two or more mental health

conditions.

This emotional landscape adds depth and

complexity to the process, requiring brokers

to wear both a business hat and an emotional

intelligence cap. Acknowledging and understanding

the diverse emotions tied to a business sale is of

paramount importance. Sellers may experience a

mix of nostalgia, anxiety, and anticipation.

Buyers, on the other hand, might grapple with

excitement and trepidation about the future. As a

broker, recognizing and empathizing with these

emotions is key to forging meaningful connections

and facilitating a smoother transaction. It’s vital to

acknowledge the emotional toll that brokering can

take on all parties involved in the transaction and

to manage this burden effectively to perform well.

Shi�ing from a negative to a positive outlook

is crucial when emotions take a detour into

negativity during the business sales process. Stress

is an integral part of the business sales process,

and recognizing stress is crucial. Various factors

contribute to stress such as navigating egos

(including our own), interactions with challenging

individuals, intricate transactions, meeting client

expectations, and contending with uncertainties

in deals. Practical tips for stress management

include time management, delegation, practicing

mindfulness and meditation, regular exercise, and

maintaining a healthy work-life balance. A healthy

work-life balance prevents burnout, enhances the

quality of life, and ensures long-term sustainability

in our brokerage practice.

Building emotional intelligence, o�en referred to as

EQ (Emotional Quotient), is critical for a business

broker. EQ involves recognizing, understanding,

managing, and effectively using one’s own

Navigating the intricate

world of business sales is a

journey filled with intense

emotions for all parties

involved—the buyers, sellers,

other advisors, and notably,

the business brokers

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