This article appeared in the July 26, 2013 Jewish Advocate.

Bringing buyers to sellers, he creates business shidduchs

Longtime bagel retailer brings considerable expertise into arranging business sales

By Susie Davidson

Special to the Advocate

You could call David Cohen of Natick a business yente. “In a nutshell, I help people buy and sell businesses,” said the New England Managing Director/Senior Business Analyst of Vested Business Brokers (VBB), a company based in Smithtown, Long Island. “I am not a financial manager; I am a business broker.”

With a B.S. degree in management from Bentley College and more than 25 years in hands-on business management and consulting, Cohen is well-suited to his profession. But what makes him an especially good fit is his own experience as a smallbusiness owner. Over the phone from his home-based office in Natick, he concurred. “My opinion is that former small-business owners make the best brokers,” he said.

Following his graduation from Bentley, the Somerset native joined his family’s fourth-generation business, Fall River Glass Co. In 1989, Cohen also began New York Bagel Co., with locations in Fall River and North Dartmouth. “The glass company no longer exists, but the bagel business is still going strong,” he said. Cohen is still part owner; his brother, five years his senior, is a partner, and was also involved in the glass company.

“When I decided to step away from the bagel business after 13 years, I was searching for more of a professional, business-to-business career, and I stumbled upon Vested on a job-listing website,” he said. Ten years later, he is still brokering businesses, as well as training new brokers.

Vested Business Brokers, which Cohen said is the fastest-growing business brokerage firm in the country, was started 12 years ago by Nathan Goldstein, a Wall Street businessman. “VBB helps people buy and sell smallto medium-sized, profitable, privately held businesses,” he said. “We work with all types of businesses, including restaurants, gas stations, liquor stores, Laundromats, car washes, convenience stores, dry cleaners, daycares, home-based, Web-based, wholesale, manufacturing, distribution, and anything in between.”

Cohen has brokered re-sales of existing Subway, Auntie Annie, 7-Eleven, Honeydew Donuts and other franchises. He travels throughout the Northeast, and has facilitated deals in Massachusetts, Rhode Island, Connecticut, New Hampshire, New York, New Jersey, Pennsylvania and Maryland.

The company currently lists more than 3,000 businesses on its website that are available for sale, and has more than 150,000 active buyers in its database. “There are over 150 brokers in the network,” said Cohen, while stressing that sellers only pay a fee if they are successful in finding them a buyer and closing the deal. The brokers, he said, are affiliated but are independent contractors. “The relationship the brokers have with the main company is that when we get listings, the company markets the listings on various search engines and websites to attract buyers,” he said.

“In general, you don’t often run into business brokers,” admitted Cohen. And certainly, this field may appear unique. But then again, when was the last time you saw a sign on a business window, advertising itself for sale? “The norm is that most sellers wish to keep everything confidential,” Cohen agreed. “From the seller’s standpoint, confidentiality is very important. Sellers don’t want their competition to know, or their customers, or, most importantly, their employees,” he said. “Employees get nervous when they hear there might be a sale, and might start looking for another job, and this can create problems.

“The last thing a seller wants is for someone to walk into their business and say, ‘Hey, I heard it’s for sale.’”

But he doesn’t think of it as an embarrassing situation for owners. “People sell for different reasons,” he said. “Sometimes it’s time to retire; sometimes they just move to another area.”

As for the employees, they generally keep their jobs. “Usually when people buy a business, they buy it because it’s ongoing,” said Cohen. “They usually retain the current employees, because they need them. In fact, probably over 90 percent of them do that.”

According to his company bio, Cohen’s experience includes implementing, analyzing and monitoring production, inventory, vendor/supplier contracts, and customer service methods, in order to increase profitability, and improve dependability and growth for his clients. Of course, as a former business owner, he also well knows both the inherent potential and the challenges that face any current or future business owner. Therefore, in addition to knowledge regarding acquisition and sell-off, brokers must be well versed in operations, human resources, project management and general planning strategy. Cohen brings all of those qualifications, as well as ethics and understanding, to his practice. And that’s good, because Cohen said that unlike real estate, there is not a lot of co-brokering that goes on between agents. That means that buyers establish a pretty good relationship with Cohen. “My upbringing, including my early Jewish education, has taught me to be honest, ethical, and a straightforward business person,” he said. Cohen was a bar mitzvah and longtime member of Temple Beth El in Fall River, the synagogue originally founded in part by his great-grandparents. “I owe a lot of my success to my mother, Fran Cohen, who still resides in Somerset, and my father, Norm Cohen, who passed several years ago,” he said.

Cohen served as past President of the board of directors for the Diabetes Association Inc., based in Fall River, and currently resides in Natick with his wife, Sharon Saklad Cohen, a speech pathologist. You might find the couple now attending services at Temple Israel in Natick. “She is also a Somerset native, but we only met four years ago through JDate, even though we had grown up within a mile from each other,” he said. “Our parents knew each other, but we didn’t.”

While buyers can access the listings free of charge, they can’t showroom. They can only see generic information that might include a description, and cash flow, annual revenue, and asking price figures, as well as the state and country. To view the specific names and addresses, they need to register, sign a confidentiality agreement, and pay a nominal fee (refundable upon a sale).

Buyers need to perform their due diligence as well. “When somebody buys a business, they’re going to check everything out before they go into a deal,” said Cohen. “They want to know that there is no problem with the lease, and if equipment is in working condition. They’re not going to just write a check.” To that end, buyers will often hire their own attorneys and accountants. “I’m the intermediary,” said Cohen. “I put buyers and sellers together. “ The seller, he said, provides all the facts and figures. “For example, I might have the sellers put forth three years of tax returns, interim financial statements, lists of furniture fixtures and equipment, copies of leases and contracts, and possibly customer lists, depending on the type of businesses.”

And how are businesses doing these days, given the economy? “Since the economic downturn, several years ago, I have seen many businesses have lower revenues, but have also seen an increase in buyer activity,” he said. “With high unemployment, many people see buying a business as a viable alternative to finding a new job.” Cohen added that he has seen an uptick in business within the past year: “Indications are that things in general are improving.” For buyers interested in a Jewish area, their best course is to register and sign the agreement. In fact, that goes for anyone looking for a specific area.

Part of Cohen’s duties for VBB is to help train new brokers how to evaluate a business, in order to come up with a price. Is there a formula? “There is no specific one; it is basically information gathering,” he said

He performs a cash-flow analysis, and the price is usually based on the amount of cash flow, or annual financial benefit, the business generates for the owner. “Depending on the business and industry, a multiple of a certain amount of times will be placed on the cash-flow figure, to come up with the value,” he said.

So, has Cohen ever brokered a bagel business? “I actually brokered a bagel company in the Attleboro area,” he said. “In fact, I sold that business twice.” The broker and seller were able to talk shop: “The owner who had had it for a number of years used my same supplier.” The first buyer was a customer, and it was successful. But after three or four years, the owner, a single mother, decided to sell, and turned to Cohen. The new owner, he believes, is still there.

Which begs the question: How do sellers find him? “A lot of it is done by referral and world of mouth,” said Cohen. “We do some cold calling, marketing to business owners, and offer to do an evaluation of their businesses,” he said. “A lot of the listings I get now come from referrals from previous buyers and sellers I’ve worked with, and also, from their attorneys and accountants.”

But clearly, Cohen’s M.O. is his buyers. “Whenever I’m dealing with a new buyer, especially a first-time buyer, I’m very cautious about what they might not know,” he said, as he related an anecdote about a buyer who was looking for a pizza shop. “One of the questions he asked was, ‘What happens if I wake up and don’t feel well – is there a service that I can call that can come in and run the business for me?’” The seller and Cohen looked at each other in disbelief. “I looked at the buyer and said, ‘You obviously should not be buying a business. If you don’t show up, it doesn’t open. You’re the guy with the key.’”

Any deal, Cohen said, is only going to be successful if it is win-win situation for both buyer and seller.

“I’m always cognizant when it’s a first-time buyer,” he said. “I wouldn’t want to put anybody in a position to fail.”