We approached a competitor about buying their business and they decided to engage a business broker. The info sheet they provided was very limited with gross sales for a few years, gross margin, & an "adjusted" EBITDA. They would not elaborate upon what was included in that calculation. Since we were unable to make an offer they say they are going to explore the general M&A market. Any advice on how to crack this egg would be appreciated.
If they aren't willing to provide transparency and full disclosure - allowing you to complete your due diligence - you might be better off to move on.
In other words - based on their elusive behavior and lack of willingness to cooperate - the egg you are looking to crack is likely a rotten one.
Of course you can always try to get this info from the broker (it wasn't clear in your description whom you requested the info from - the owner(s) or the broker). If they are uncooperative then the whole deal should be rejected by YOU.
In any case - Best of luck!
DON'T CRACK THAT EGG UNLESS YOU WANT YOLK ON YOUR CHIN!!
Sounds like these dudes are big fat losers... BTW, 'good luck' to them in finding any success in the general M&A market. They are about to get their asses handed to them.
WALK AWAY. I know you're probably sad to even think about that. But do it.
This is a standard technique used by the sellers. I'm assuming the business broker wanted you to submit a bid - you should submit a bid to show the other side that you are serious about a transaction (note: a preliminary bid will be non-binding, and will generally include a valuation range). If the seller is satisfied with the range you listed (and you're not worlds apart on valuation), they will then let you look deeper under the hood - during this next round of bidding is when you will generally be able to request full audited financials, etc.
Hope this helps, and let me know if you'd like to chat further!
maximspiegel [at] gmail.com