Do Business Brokers Specialize In Specific Types of Businesses?

Business Brokers Generally Do Not Specialize

Hiring the right business broker to sell one’s business can be a serious challenge. The seller of a business has often devoted the majority of their working life to the business, and rightfully expects the broker entrusted with selling their business to be well informed and knowledgeable about the industry in which the business operates. While a professional business broker should have specialized knowledge about the industry and business sales practices within the specific industry, business brokers almost never exclusively sell only businesses from one specific industry.

Why Business Brokers Do Not Specialize

A business broker specialist that exclusively sells local businesses in only one particular industry can not generally make a living. There are simply not enough local businesses in one industry to sustain a full time and active broker.  Business brokers who purport to ‘specialize’ in only selling restaurants, for example, are part of a national or regional brokerage company. Being part of a large brokerage company, however, provides no meaningful benefit to a local business owner in Palm Beach County, Florida.  The advertising means by which business brokers find the vast majority of buyers (see is available to any and all business brokers. Moreover, locally based brokers know the local market and provide more personalized service.

Specialized Knowledge Critically Important for Business Brokers

While business brokers do not generally limit themselves to selling businesses only from one particular industry, business brokers should possess specific knowledge for each industry in which they sell businesses. The industry-specific knowledge includes typical challenges faced by business owners within specific industries, how formal due diligence is typically conducted within specific industries, and the relative business valuation multiples that specific industries have in comparison with one another.

Specialized Knowledge of Restaurant Sales

Restaurant sales are quite common in the business brokerage field, and does require a business broker with specialized knowledge about the restaurant industry to effectuate a smooth sale.  For example, it helps to know what the COGS (Costs of Goods Sold) percentage is for a restaurant (typically 30% of sales), whether the lease allows the buyer of the restaurant to change its concept or menu, and how the monthly rent compares with the monthly sales (typically should be ten percent or less). Moreover, it is helpful for a broker to know that restaurant sales often involve the buyer conducting formal due diligence (at least in part) by personally observing customer traffic and sales.

Specialized Knowledge of Beauty Salon Sales

  • In the salon industry, the most critical factor as far as the valuation of a beauty salon is the volume of sales from stylists who are not the owner and who will stay after the sale occurs.
  • Therefore, it is essential for a business broker selling a salon to properly gather and analyze the salon’s financials, determine the properly adjusted owner benefit, and then assigning a multiple (typically 2-4 x) to the owner benefit.
  • The key to pricing a salon is whether or not the stylists (and clients) will stay after the sale, and whether the owner benefit will be the same for the buyer as it was for the seller.
  • The more likely the stylists are to stay and the stronger the location and physical assets of the salon, the higher the multiple the salon will receive.

Specialized Knowledge of Laundromat Sales

Laundromats are viewed as stable and easy to operate ‘cash-cows’ by various types of buyers including absentee-owned investors. When it comes time to sell laundromats, the main issue to confront is determining its actual sales and profits. This is because the cash nature of the business usually means that there are often unrecorded sales. The best way to verify the laundromat’s sales (and in many cases dry-cleaning stores) is often by reviewing its utility records. The laundromat’s monthly water or gas usage often will allow a knowledgeable buyer to closely approximate the usage of the machines and therefore the sales. A knowledgeable business with specialized knowledge about the laundromat industry will provide the buyer with the relevant utility bills during due diligence.

Specialized Knowledge of Healthcare Company Sales

  • The demand in South Florida among business buyers has consistently been very strong for healthcare companies.
  • Physical therapy centers, physician offices, home health agencies, Durable Medical Equipment companies (DMEs) and nurse registries all see strong customer demand due to the favorable demographics for seniors in South Florida.
  • The steady and recession-resistant nature of the healthcare industry is quite attractive for many business buyers.
  • Business brokers must be aware of the licensing and regulatory aspects of the healthcare industry.
  • Most healthcare-related companies require approval from AHCA (Agency of Health Care Administration) in order to transfer the license from the seller to the buyer.
  • As a result, many buyers prefer to implement a stock purchase deal rather than the more typical asset purchase deal.
  • Most business buyers shy away from this as it gives them the liability of inheriting the seller’s corporate entity.
  • In the healthcare industry, however, stock purchase deals frequently occur as it is the only way for the buyer to more quickly and easily comply with the licensing transfer process.
  • It also enables a buyer to inherit the seller’s corporate insurance contracts.
  • Having experience in the healthcare industry is of paramount importance for a business broker.

One can see how having specialized knowledge and experience in various industries is of tremendous importance for a business broker to properly serve their role in a successful transaction. Finding a business broker who specializes by only selling business from a particular industry, however, is usually not realistic or worthwhile.

Give Martin at Five Star Business Brokers of Palm Beach County a call today for a FREE evaluation of your business.