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Should a Commercial Real Estate Broker Sell Your Hawaii Business

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We’re not going to pretend for one moment that we’re objective on this question.  But a minimal investigation into the issue (via Google for example), will quickly reveal the following facts about Hawaii commercial real estate brokers:

• Most stick to their knitting and don’t do any business brokerage.  Several refer their business opportunities to us.
• At best they dabble in business brokerage.  95% or more of their revenues, and their overwhelming focus, is on commercial real estate.
• Their primary buyers, that they spend 95% of their time and money focused on, are either 1) large entities (such as insurance companies, pension plans or trusts) or wealthy individuals looking for passive investments or 2) business owners looking for real estate for their established business concept.  Almost without exception, their buyers are not looking to acquire new business opportunities. 
• They represent only a very small fraction of the businesses for sale in Hawaii.  The vast majority are represented by business brokers.  If you were a buyer, who would you go to?  Their buyer network for business opportunities is trivially small.
• None have any formal education or certifications in business brokerage.  Few have any training in marketing, accounting, business operations, business strategy, business valuation, etc.  Why should they when it’s such a small fraction of their focus?
• The vast majority have never owned a business.  You can’t fully understand or sell what you haven’t experienced.  They don’t understand the stress on business owners, the headaches of managing employees, the blood, sweat and tears put into building a business.  They don’t know how to sell opportunities to buyers, relate the pride and joy of business ownership, calculate the synergistic potential in a merger, or identify new growth strategies that would take a client’s business to the next level (enabling the buyer to justify paying more). 

For business intermediaries, and particularly those working for VR, the above statistics are flipped.  100% of our business and focus is business brokerage, and activities that enhance business value.  Almost all of our agents are experienced entrepreneurs, with years of experience and advantage training on advanced business topics.

It’s sad fact about business brokerage, and a grave disservice to business owners, that the licensing requirements are so trivial.  A high school graduate can get a real estate license, and start brokering businesses, after taking a week long cram course and passing a painfully simple test that covers about 5% of the issues relevant to selling a business (e.g., assigning the lease and agency issues).  A real estate agent is not required to know the first thing about any other aspect of business (strategy, financial analysis, marketing, advertising, managing employees, etc.)

Let’s be clear.  We’re not knocking commercial (or residential) real estate agents for what they’re best at – selling real estate. 

When we buy and sell real estate, we engage the real estate agent with the most experience and best track record we can find for the type of property we are buying or selling.  If we want to buy a Waikiki condo, we’ll find a certified residential specialist or “GRI” who has sold at least five in the last year.  If we want to sell a shopping center, we’ll find a “CCIM” who knows that market, not a business broker who dabbles in it and is willing to “give it a shot”.