Broker or Joker | Behind the Buy [3/8] [304]
One word--interloper! When a new mysterious broker enters the transaction and starts to kick up dust, Nasir and Matt take the reins. The seller signed off on the letter of intent (see episode 2), yet this “business broker” serves only friction and challenges by refusing to send financials, whilst demanding more of a firm commitment from the buyer.
Still, just like dealing with any drama causing personality, the guys and our buyer do our best to approach it with a clear mind and cold hard facts. However, with now more than two in this tango, will our guys be able lead us through the muddy waters of this “broker or joker”?
Full Podcast Transcript
NASIR: Welcome to our third episode of Behind the Buy. This is where we're going to encounter a third-party interloper. Usually, they're not, it's the broker episode, right, Matt?
MATT: Yeah, probably our first and only introduction to another party into this series.
NASIR: I have to say, this is the first time that our listeners are hearing -- We could have easily predicted this, but this is the first time where our listeners hear a transaction starts to just take a little bit of a different direction than what's expected. Again, that's common, and I think we mentioned at the beginning of our series or last episode that you kind of have to walk into these transactions expecting the unexpected to be really agile, otherwise, you're going to stress yourself out and it's also going to get in the way of getting a deal done.
MATT: I kind of look at it in the sense of any big event, big transaction, there's going to be things that are going to pop up that you just have to be prepared for, or prepare as much as you can. Not to throw it back to our wedding analogy, but I look at it as a wedding. You know something's going to happen leading up to it or on the day of too and you just have to be prepared to fix whatever needs to be fixed and move along and make sure that you hit the finish line.
NASIR: We're going to play the call here in a second. There's a couple of calls in this one. Our buyer gives Matt a call without me. Luckily, he recorded that call.
MATT: That's my favorite call.
NASIR: We do have a vocab review. A couple words that we used in the last episode including Letter of Intent, LOI, I think that's pretty self-explanatory but a couple of new ones. The first being escrow. What's escrow, Matt?
MATT: Escrow can mean a variety of things, I suppose. But in this context, there's going to be money that's held for a downpayment in this transaction and it's held in this escrow until we close.
NASIR: It's usually a third-party, usually unrelated to the transaction. We've had experiences where they want us as attorneys, whether it's buyer's attorney or seller's attorney to act as escrow. There are circumstances where that may be appropriate. Typically, we don't do that because there are things that can happen during escrow and that alleviates any kind of conflict of interest. You want your attorneys to be able to represent you throughout the transaction. The second vocab word again is a repeat from last time which is no-shop provision. This actually comes into play in this call you'll see because the no-shop provision is a provision that we actually put in the letter of intent where the parties agree that the seller is not going to go out there and "shop around" or go to other potential buyers for their business. That's going to come up in this call, so let's take a listen. Did I miss anything, Matt?
MATT: No, it was a pretty normal conversation, these 2 calls, so I think we're good.
NASIR: Good, okay. Let's listen in.
MATT: Hello?
BUYER: Hey, Matt. How are you?
MATT: Hey, pretty good, just catching up on some of your emails, in fact.
BUYER: Okay, I thought we could just talk it out. I thought that it would be easier.
MATT: Yeah, definitely. We're recording, by the way.
BUYER: Okay, got it. I just got off the phone with the seller.
Still, just like dealing with any drama causing personality, the guys and our buyer do our best to approach it with a clear mind and cold hard facts. However, with now more than two in this tango, will our guys be able lead us through the muddy waters of this “broker or joker”?
Full Podcast Transcript
NASIR: Welcome to our third episode of Behind the Buy. This is where we're going to encounter a third-party interloper. Usually, they're not, it's the broker episode, right, Matt?
MATT: Yeah, probably our first and only introduction to another party into this series.
NASIR: I have to say, this is the first time that our listeners are hearing -- We could have easily predicted this, but this is the first time where our listeners hear a transaction starts to just take a little bit of a different direction than what's expected. Again, that's common, and I think we mentioned at the beginning of our series or last episode that you kind of have to walk into these transactions expecting the unexpected to be really agile, otherwise, you're going to stress yourself out and it's also going to get in the way of getting a deal done.
MATT: I kind of look at it in the sense of any big event, big transaction, there's going to be things that are going to pop up that you just have to be prepared for, or prepare as much as you can. Not to throw it back to our wedding analogy, but I look at it as a wedding. You know something's going to happen leading up to it or on the day of too and you just have to be prepared to fix whatever needs to be fixed and move along and make sure that you hit the finish line.
NASIR: We're going to play the call here in a second. There's a couple of calls in this one. Our buyer gives Matt a call without me. Luckily, he recorded that call.
MATT: That's my favorite call.
NASIR: We do have a vocab review. A couple words that we used in the last episode including Letter of Intent, LOI, I think that's pretty self-explanatory but a couple of new ones. The first being escrow. What's escrow, Matt?
MATT: Escrow can mean a variety of things, I suppose. But in this context, there's going to be money that's held for a downpayment in this transaction and it's held in this escrow until we close.
NASIR: It's usually a third-party, usually unrelated to the transaction. We've had experiences where they want us as attorneys, whether it's buyer's attorney or seller's attorney to act as escrow. There are circumstances where that may be appropriate. Typically, we don't do that because there are things that can happen during escrow and that alleviates any kind of conflict of interest. You want your attorneys to be able to represent you throughout the transaction. The second vocab word again is a repeat from last time which is no-shop provision. This actually comes into play in this call you'll see because the no-shop provision is a provision that we actually put in the letter of intent where the parties agree that the seller is not going to go out there and "shop around" or go to other potential buyers for their business. That's going to come up in this call, so let's take a listen. Did I miss anything, Matt?
MATT: No, it was a pretty normal conversation, these 2 calls, so I think we're good.
NASIR: Good, okay. Let's listen in.
MATT: Hello?
BUYER: Hey, Matt. How are you?
MATT: Hey, pretty good, just catching up on some of your emails, in fact.
BUYER: Okay, I thought we could just talk it out. I thought that it would be easier.
MATT: Yeah, definitely. We're recording, by the way.
BUYER: Okay, got it. I just got off the phone with the seller.
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