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What experience teaches you the hard way
Accepting an inflated asking price just to win the listing.
Listings priced too far above market tend to sit. Buyers see them as not serious, lenders won't underwrite them, and you can spend months marketing something that was never going to sell at that price. Meanwhile, your time and energy go into a deal with low odds while better-priced opportunities pass.
As a practical rule of thumb, be cautious when a listing is priced more than 15-20% above what comparable businesses in the same industry have closed at over the past 12-18 months. There are exceptions, but they need a defensible story. If a seller won't move on price, consider a 90-day exclusive with a built-in price reduction provision.
Signing a listing agreement without first checking for issues that could derail a future sale.
You can spend three months marketing a business, find a serious buyer, reach LOI, and then due diligence surfaces something that should have been caught earlier: an undisclosed lawsuit, a lease that won't transfer cleanly, leased equipment, high customer concentration, or unpaid sales tax. By that point, the deal usually dies.
Before signing the listing agreement, run a brief vetting conversation. Pending litigation? Lease assignability? Top customer concentration? Equipment ownership? Tax issues? Key employee retention? If something looks problematic, address it before going to market, or pass on the listing.
Trusting the seller's stated SDE without independently reviewing the add-backs.
Sellers often present aggressive add-backs to justify a higher asking price. Personal expenses, family member salaries, vehicle costs, club memberships, and discretionary travel are common categories that buyers and lenders frequently push back on. If you don't catch these before going to market, the buyer's lender almost certainly will.
Recast SDE yourself before listing. Pull at least three years of tax returns. Treat any add-back over $5K as something you'll need to defend with documentation. As a general guideline, assume the lender will be 20-30% more conservative on add-backs than the seller is.
Telling sellers a deal will close in 30 to 45 days from LOI.
Realistic timelines are usually longer. SBA financing alone often takes 45 to 60 days. Add legal review, lease assignment, lien searches, and employment agreements, and even clean deals frequently run 60 to 90 days from LOI to close. When sellers expect 30 days and the deal is still moving at day 50, they get nervous.
A practical rule of thumb is to quote around 90 days from LOI to close, though clean deals may move faster. Build a written timeline with weekly checkpoints and communicate proactively, even when nothing significant has happened that week. Sellers don't tend to panic about delays they were prepared for. They panic about silence.
Letting buyers submit letters of intent without your review first.
Buyers, especially first-time buyers, often structure offers in ways that won't fly with sellers: non-standard earnouts, asset purchases where stock makes more sense, financing contingencies, or open-ended due diligence periods. The seller rejects the offer, the buyer assumes you weren't representing the deal well, and you can lose both sides.
Review every LOI before it goes to the seller. You're not changing the buyer's terms. You're advising on structure, timeline, and contingencies so the offer has a real chance of being accepted. A 30-minute call with a buyer before they submit can save weeks on a deal that wouldn't have moved forward anyway.
Letting a seller insist on a large earnout tied to metrics the buyer can't fully control.
Sophisticated buyers tend to push back on earnouts they don't have direct influence over. Earnouts tied purely to revenue growth are particularly difficult, since post-transition performance often dips before recovering.
Earnouts tend to work best when they're tied to metrics the buyer can influence: key customer retention, gross margin maintenance, or specific contract milestones. As a general guideline, earnouts above 15-20% of total deal value start to make experienced buyers cautious.
Letting the seller respond directly to buyer due diligence requests without coaching or context.
Sellers often expect due diligence to be a quick formality. When buyers come back with detailed questions, document requests, and follow-ups, sellers can feel blindsided. They didn't realize how thorough the process actually is. They get defensive or push back, and the buyer can interpret this as the seller hiding something. A meaningful share of deals that fall apart in due diligence do so because expectations weren't set properly upfront.
Set expectations before due diligence even starts. Walk the seller through what to expect: how long it'll take, what kinds of questions are coming, what's normal vs. what's a red flag. Then be the buffer. Have due diligence requests come through you first, frame the questions for the seller, and handle the back and forth. Most of the work during DD isn't about the data. It's about keeping the seller calm and focused.
Putting most of your prospecting effort into finding buyers for other brokers' listings.
In most markets, quality listings are scarcer than qualified buyers. When you control the listing, qualified buyers come to you. When you're chasing buyers, you're competing with every other broker working those same deals.
Weight your prospecting time more heavily toward listing acquisition. Building relationships with CPAs, attorneys, wealth managers, and other professionals whose clients are approaching exit decisions tends to produce a more reliable pipeline than chasing buyer leads.
Waiting until you have a buyer in contract to start calling SBA lenders.
SBA-backed acquisitions often take 45 to 90 days from application to funding. If you're starting from cold introductions, you can lose two to three weeks just getting in front of the right person. During that time, buyer enthusiasm fades and seller anxiety builds.
Build relationships with three to five SBA preferred lenders before you need them. Different lenders have different industry preferences. Some are comfortable with restaurants, others avoid them; some specialize in service businesses, others in manufacturing. A quarterly check-in is usually enough to stay top of mind.
Picking a brokerage based primarily on the highest commission split.
A 90/10 split sounds attractive, but if you're paying for your own marketing, lead generation, errors and omissions insurance, listing platform fees, and starting from zero on inventory, the math often favors a lower split with more support, especially in your first year or two.
Run the actual numbers. Ask how many listings you'd be put on in year one, what the average broker's gross commission income looks like, and what's covered vs what comes out of your pocket. The right structure depends on your situation.
Notice what they have in common?
The brokers who close consistently aren't smarter or harder working. They just stopped making these mistakes earlier.
HedgeStone Business Advisors | hedgestone.com | (561) 593-3711