If you have been around the small business mergers & acquisitions field long enough you might have wondered…why do so many business transactions occur in Florida?
After a few years of valuing businesses and acting as an intermediary I asked myself this same question. Then, one day while writing my quarterly blog summarizing BizBuySell acquisition volume & multiples from across the country the thought occurred to me, “Miami has twice the business volume of Houston and Tampa has twice as much activity as Charlotte.”
The reason this left me dumbfounded is that the volume differences were noted when Florida cities were compared with cities of equal size outside of Florida. And as I contrasted more Florida sales volume with cities outside Florida the volume phenomena remained consistent.
You might be asking yourself…okay the sales volume is greater in Florida, but why? The answer is simple – – business brokers in Florida split commissions. The Business Brokers of Florida (BBF) is the only multiple listing system of its kind in the country. What does this mean?–Sell side brokers in Florida collaborate with buy side brokers resulting in more deals. And I can tell you from experience, business brokers outside of Florida generally don’t collaborate, which leads to fewer deals.
What does this mean for you? Well if you are a BDO you now know why your Florida cohorts perennially close a lot of deals. If you are a business broker outside of Florida you now recognize that collaboration will lead to more success fees. And, if you are a Business Valuator, now you know why 28% or more of all comparable sales in Biz comps, IBA and Pratt’s Stats are Florida transactions.
If you are a seller you might ask your broker: “Do you share your commission with other kids in the sandbox?” Their answer might surprise you.
