When the Music Stopped: How a Business Broker Found Insight in a Challenge
You may not think that coping with a health challenge compares to selling a business, but former GABB President Eric Gagnon found similarities and grew. Eric and his wife, Robin, are the founders of We Sell Restaurants, the nation’s largest restaurant firm focused on selling restaurants. Both are GABB members and members of the 2019 Million Dollar Club.
Many of you may not know that I have experienced three ear surgeries in the last 12 months, all of which have left me fundamentally without hearing. That creates a pretty large challenge as I LISTEN to people for a living.
I have been without hearing in one ear for my entire life, a fact most of my clients and business associates would have never known. It didn’t stop me from pursuing an amazing career and learning English as a second language. French is my primary language.
How am I coping? I use the same approach for different phases of this challenge that a buyer, a seller or a broker would use to keep marching forward. I also use a lot of prayers and self-motivation, two universal tools that everyone should use daily.
Originally I was told by one of the best ear surgeons in the U.S. that I had an 80% chance my hearing would improve with the first surgery and less than a 2% chance I would go deaf. According to the specialists, the remaining ear issues in my only hearing ear would go away.
Translate this into a buyer’s language: “I’m buying a deal making strong money and proven books.” What can go wrong? Let’s do this!!
We scheduled the first surgery and went through all the testing and pre-op questions. In buyer language, we entered into a “purchase agreement” and did the first surgery. I was told to prepare for the worst — up to three months with no hearing. Once I woke up, to everyone’s surprise, especially the doctor’s, I could hear immediately!! LOUD and clear. In a buyer’s world, this would be equivalent to: “Initial due diligence fantastic. Almost too good to be true.”
Unfortunately, three weeks later, my hearing started to deteriorate. The doctor thought it was probably an ear infection, and said, “Take some meds, it will clear up.” Two weeks later, with no improvement, he says, “come see me.” I drive three hours each way so they can stick needles in my ear, do an audiogram and learn my hearing is rapidly deteriorating. Then the doctor says, “What about wearing hearing aids?” Remember, originally I heard perfectly from my single ear with no hearing aids.
The Broker in me started to kick in and realized this was equivalent to: “Expect some changes in the deal terms.”
Shortly thereafter, once again my hearing deteriorated to the point the hearing aids were useless. Back to the doctor. Read here: “Buyer is very upset with current condition, but due diligence is over so he can’t walk away from the deal and must find a solution.”
Doctor reveals that scar tissue is growing between the bones which impairs my hearing. Solution: Second surgery to laser out scar tissue and rebuild one of the bones. Read here: “as a broker, we’ve got new movement. We find out why we have this problem and the seller is willing to fix it. That’s great news. Buyer is now happy with the offer and keeps moving forward.”
Surgery #2 happens. I wake up with slight improvement in hearing and even back to my best hearing performance with the hearing aids two weeks later. Buyer thinks: “All problems fixed. Everyone is happy and we accept some compromise – let’s go to closing!”
Wait a minute. Four weeks later, back to square one. Hearing has dropped beyond hearing aid capacity and declining. The broker in me is thinking: “Maybe this isn’t the right deal for everyone, but how do we minimize damages?”
At this point the right thing to do was to walk away from this deal and find a new and better one. The new deal for me becomes a new doctor at the University of Arkansas Medical Center thousands of miles from home.
His assessment: Plan A: A new surgery to replace two bones with titanium parts that scar tissue won’t cling to. Success will be hearing well with hearing aids without any loss over time. Plan B: if Plan A fails, we will do a cochlear implant 60 to 90 days later, and this will work. As a broker, I like the “no surprises” approach. Always be ahead of the game, with a backup plan. This was music to my non-hearing ears!
Surgery #3 happened on Oct. 3. I spent two weeks with no hearing at all while my ear healed from the surgery and could not accommodate hearing aids. Once again, that was a little scary but different than the first two surgeries in which I heard quickly but failed in the long run.
Ultimately, hearing aids went back in and the results are not good. The last surgery did not heal the issue. I have now been fundamentally without hearing for the last year. The next step is a cochlear implant. This is a device implanted that goes directly to my brain stem. I will re-learn “hearing” in this fashion after the surgery and therapy.
During this time, I still maintained a full book of business and worked to the fullest of my abilities. Technology has advanced to help me with hearing impairment. I carry two phones. My normal iPhone has a Bluetooth connection to my hearing aids, and my Android that translates voice when I put it near sound (like speakers or a person). Some people did not even notice I was using a device to hear them. Others noticed a delay while I ‘read’ their comment before responding.
It would have been easy to give up and pity myself, but I chose to focus on what I have learned from the experience to make myself better. Here are some of the benefits I gained.
I listen better: At the beginning of this blog I said I LISTEN to people for a living. I used to do two or three things at the time while on the phone. Now I must read the phone so I cannot do any other task. I am now FULLY listening to the buyers and sellers on the phone and it made me a better broker for it. I also restate their comment or concerns which is also helpful to make sure I understood what they said. My results also reflect that this year.
Every call and every interaction must be meaningful, since listening is very tiring. I must make sure that this conversation worthy and productive, and if it’s not, I politely end the discussion and find a productive activity to engage with.
I focus better: My focus is more intense. If you cut out outside noise you will see things much clearer in focus. This applies when I look at financials as well as when I engage in my hobbies. I rely a lot more on visuals now than what I hear.
I write better: I also became a better writer as I have been sending lengthier and more detailed emails.
My interactions with my family have changed. Most couples married for nearly 20 years will just toss out a comment from across the room with music or TV in the background. My wife and I must be very close to one another for me to recognize that she is speaking. Since we run a business together, that means we talk a lot. We have relied on more communication by touch, where she lets me know she’s speaking. I can read her lips somewhat and understand what she’s saying or use my phone. Either way, I’m 100% focused on her and she on me when we are communicating. This is a great tip for any married couple.
My professional life has changed. I cannot sign up for certain functions I would normally attend. Board meetings are tough because so many people are speaking, and I can’t hear what is being said in a large table environment. My wife and I often speak or lead round tables at industry functions and that has not been possible without her picking up on most of the questions and bringing me in on the back end.
Make the Best of Every Single Day. This is part of my destiny and my journey. I am embracing it and making the best of it every single day. In the best-case scenario, I have just a few more months without the music and things will get better by the first quarter of next year with the fourth and final surgery.
Either way, I have spent a year without music and gained a new appreciation for communication.
Eric is an industry expert in restaurant sales and holds the Certified Business Intermediary (CBI) designation from the International Business Brokerage Association (IBBA). A frequent writer and speaker in the restaurant industry, Eric co-authored Appetite for Acquisition, an award-winning book on buying restaurants.
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The Theory and Practice of Business Brokerage within the Context of Real Estate License Law & Rules
Kathryne Pusch
By Kathryne A. Pusch, President & Consultant, ConsultKAP, Inc.
Potential clients and prospective business brokers often ask GABB “What are the legal licensing requirements of professionals assisting buyers and sellers of businesses in Georgia?”
I think I can answer this question because I was a business broker for many years, am a former Board Member and President of GABB, RE Instructor, and was a past member of the Georgia Real Estate Commission’s (GREC) Education Advisory Board.
Here’s what the law says:
GA Law 520-1-.12 Business Brokerage.
Unless otherwise excepted from licensure requirements by O.C.G.A. Section 43-40-29, a person who brokers the sale of a business must hold an appropriate license issued by the Commission if the sale of the business involves the transfer of any interest (including, but not limited to, leasehold or ownership interest) in real property. A business broker and any of the business broker’s associates who do not hold licenses issued by the Commission may not negotiate or attempt to negotiate or assist in procuring prospects for the sale of a business where:
(a) that sale involves the transfer of any interest in real property,or
(b) where the payment of all or part of a commission or fee to the business broker or any of the business broker’s associates in the sale of a business is contingent upon the transfer of an interest in real estate.
An unlicensed broker may not perform or attempt to perform the acts in the preceding sentence and then secure a person licensed by the Commission to approve that transaction.
Under Georgia law, anyone selling or buying, offering to buy or sell, acquiring prospects to buy or sell or negotiating for the buying or selling of real estate for compensation must be licensed by the GREC. According to section 520.1-.19 of Georgia law, Business Brokers are covered by the same legal requirements as any Real Estate licensee if the sale includes the transfer of any interest in real estate.
While some interpret that to mean you don’t need a real estate license if you are selling a business and not any property (as in dirt or brick & mortar,) in fact, there are few instances in which this is the case.
Active businesses operate out of and occupy premises that are either owned or rented/leased, with the exception of a home-based business. Any business Purchase & Sale contract will contain a contingency that the RE interest (freehold or leasehold) must transfer from the seller to the buyer. (If it does not, the business will not have premises in which to operate after the sale.)
Any third party lenders of the funds to complete the transaction will also require a lease or RE purchase agreement to approve the loan for the business acquisition, which will be a contingency of the sale.
Therefore, anyone who is advertising a non-home-based business for sale listing is offering for sale a business that includes either a leasehold or freehold interest in real estate, whether or not the listing summary/web site ad has a box checked for “Real Estate.” In fact, unlicensed people who sell businesses will NOT check “Real Estate,” despite the fact that there is a business facility owned or leased, because they are NOT LICENSED.
Anyone who is negotiating with sellers and buyers for the purchase and sale of a non- home-based business for sale is involved as a broker in a transaction that includes either a leasehold or freehold interest in real estate. Therefore, that person must have a current Georgia real estate license under Georgia law.
The terms of the real estate purchase or the rent or lease terms (occupancy costs) are always a key factor in business expenses and profits, and therefore a key factor in the investment decision, so it is not possible to negotiate for the purchase and sale of a business without including the real estate factors.
The occupancy of a going concern cannot be separated from the operation of the going concern or from the profits of the going concern on which value of that going concern are based. Business brokers who are unlicensed are operating in violation of Georgia license law, regardless of how they “spin” their advertising.
Business brokers cannot assert that they are not violating license law by claiming that they have an attorney or a licensed broker to “handle” the real estate aspects of a “transaction” because of the above facts related to the inseparability of occupancy from the business going concern which is being offered for sale. The exceptions would be home-based business; non-operating businesses: sale of assets or inventory only from a closed business; or new franchises – sales by a franchisor to a franchisee of a not yet operating unit.
The GABB encourages you to let us know if you come across individuals who are operating as business brokers without the proper licenses. Contact any individual member of the board, or email the entire board at gabbboard@gabb.org.
Questions? Email: KAP@Consultkap.com
Main Office: 770-918-9390 Cell: 770-309-8580
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GA Law 520-1-.12 Business Brokerage.
see also O.C.G.A. §§43-40-1; 43-40-2; 43-40-29; and 43-40-30.
Authority O.C.G.A. Secs. 43-40-2, 43-40-14. History. Original Rule entitled “Examinations” adopted as ER. 520-1-0.1-.12. F. and eff. July 12, 1973, the date of adoption. Amended: Permanent Rule entitled “Licensee’s Duties Upon Surrender, Suspension, or Revocation of License” adopted. F. Dec. 7, 1973; eff. Dec. 27, 1973. Repealed: New Rule of same title adopted. F. June 4, 1980; eff.July 1, 1980, as specified by the Agency. Amended: Authority changed. F. Aug.5, 1982; eff. Nov. 1, 1982, as specified by the Agency. Amended: F. May 9, 1985; eff. July 1, 1985, as specified by the Agency. Repealed: New Rule entitled “Business Brokerage” adopted. F. Nov. 12, 2003; eff. Dec. 2, 2003.
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