Believe it or not, assisting a client to buy or sell a business in Michigan has no specific licensing requirements. Unbelievable I know, but this is a large part of the reason why we experience some major issues within this state. Performing a simple Google search for “Michigan business broker credentials” will reveal a plethora of valuable insights that you should be aware of, some of which you should try to abide by and others to avoid. Although it may be considered a “best practice” to have a sales associates at the business brokerage obtain a real estate license, technically this is only legally required if they are selling real estate along with the business. In no way does the training provided in a real estate course qualify anyone as a business expert.
Get to know a little about your broker upfront
A reputable broker will likely belong to recognized organizations within the industry, including the International Business Brokers Association, National Association of Realtors, or Michigan Realtors. Even accounts held with Realcomp or current listings placed on the MLS count for something. Some may ask why is this so important, especially considering what was just said in the previous paragraph? It is only because the state does not have any specific legal requirements for those operating as business brokers; these referenced organizations each have to set their own rules and regulations that members must abide by. A code of ethics is an invaluable tool that can help guide and control members behavior. Typically you can find the following duties contained therein: protection of the broker’s clients, having the best interest of the public, displaying fiduciary responsibility, agreeing not to discriminate against clients, and the disclosure of any professional relationships that may be considered a conflict of interest. With no government oversight to serve as protection, clients need to go to extra lengths in order to keep themselves out of harm’s way. Most of these professional organizations will additionally require that the business broker participate in Co-Brokering, or working with their competition in order to better serve their own clients. Why specifically is this important? Because it ensures that potential buyers are shown a wide variety of businesses, and not just the ones that their broker currently has for sale. If the broker that you are considering is not open to this option, then you may want to ask them what their reasoning is behind this decision.
Most people would assume all of the things that we have discussed would go without saying, that there is no need to put any further thought into this matter. The problem is that when things are not clearly stated in writing you have no other guarantees or recourse regarding the business brokers performance. This leaves you with one last thing to use as leverage, and hopefully you did your homework upfront to make sure that it is actually something that the broker values, their reputation. You can by no means believe everything that you read online. There are people in the world that simply enjoy making others miserable, or tarnishing a business’s reviews, for their own personal amusement. However, it is better to be safe than sorry and to heed all warnings with the strictest of caution. Use your own best judgment after utilizing every single resource that you have available before putting one cent of your hard earned money on the line.