Michael J. Weiner

It is widely believed that 99% of transactions never close. That is nothing new. But that number doesn't have to be this high if people are more sane about making a transaction work. That includes everyone from the seller, intermediary, and buyer.

What blows a deal? Well, the vast majority of times, it is the brokers in the chain. They are not the only ones of course, and sometimes they are blamed when the real culprit was the buyer or seller. One or more of them will do something stupid and inappropriate, like demanding a fee pay agreement before they will let the information about the seller's product go out.

I can name a number of deal-killers that, if corrected, could lower that 99% deal-death-rate (DDR).

Broker Insists on FPA first. That's like walking into a job interview and demanding to know your salary before you've even sold yourself. It demonstrates where that brokers' priorities are, and is a major turn-off to everyone in the deal. (It is my opinion that the reason buyers and sellers will circumvent the intermediaries is because of this and other interferences below).

No Transparency. Someone in the chain stops communication between the principal buyer and seller. The broker's job is to create a clear path from seller to buyer.

Unclear Communication. An error of omission is the same as commission.Full and specific instrument descriptions that are more than just a price and contract size. Upfront disclosure of who the buyer is (the fear of circumvention kills the deal every time.

Misrepresentation of Material Facts. One of the most heinous of the DDR's. Also one that can land a person in the hands of the authorities. From a broker representing him/her self as a principal player (buyer, buyer rep, seller, seller rep), or someone changing documents fraudulently, sometimes the words used can trap one into misrepresenting something materially important.

More Than 1 Buyer and 1 Seller Intermediary. It is astounding how many brokers will just pass a name or an email and expect to be compensated the same amount as those doing the heavy lifting. When more than one intermediary per side are involved, these squabble flare up, BEFORE THERE IS EVEN A DEAL! Keeping the loop tight with only a max of 2 intermediaries, allows the communication to happen between the buyer and seller principals. If others have made an introduction, they share in the Referral Fee pool. Many deal-makers will take a percentage of the amount paid to them, such as 10%, and that amount is divided equally among the Referral people.


Of course, this is a short list of contributors to the high percentage of DDR's. You may have others. Comments and other deal killers you have seen are welcome. Send to info@bgmtn.com