I think brokers serve a purpose, but I don't think people should neglect proprietary sourcing just bc brokers have expertise and pre-existing and ongoing deal flow. In my experience, a mix of direct and brokered sourcing yields optimal results.
A few other thoughts...
/1
- Brokers do qualify sellers, which is really valuable since a lot of time can be wasted talking to sellers who think they want to sell or just want to get a free valuation.
- Good brokers maximize the sale price of a company through good marketing and making an auction.
/2
- Brokers that do a poor job create some of the best deals for smart buyers
- Relying only on brokers means you only see deals they represent. If you like an industry, you can wait a long time to see 1+ deals in that sector. If you direct source, you control what you look at.
/3
- Developing the skillset of ID'ing, contacting, and selling an owner on why they should sell to you is a great test of an entrepreneur's grit & sales ability, both of which are essential in running a small company.
/4
- Brokered deal flow is a great way to generate new industry ideas for direct sourcing. Coming up with target markets is the hardest thing about sourcing IMO and using both methods creates a virtuous cycle and exchange of ideas that can be cross-leveraged across both methods
/5
Ultimately, the goal of searching is to find a great business, so why restrict the universe of potential deals by only relying on brokers?
(caveat, 1 reason could be time -- part-time searching is hard and if I had limited hours, I'd probably rely more/solely on brokers)
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