AmiSight 1/27: Wearing the Wrong Hat Is Expensive

Entrepreneurs wear a lot of hats. But one of the most important—and most overlooked—is the discernment hat. The one that asks a simple question before trusting anyone in a deal: Who do you really represent?

This matters a lot when business brokers and advisors enter the picture.

Most buyers don’t fully understand how business brokers work. In the vast majority of transactions, the broker represents the seller. The seller pays the commission. And despite common assumptions, it’s extremely rare for that commission to be shared with a buyer’s broker or advisor.

There’s nothing wrong with that structure—unless the buyer assumes otherwise. When entrepreneurs believe a seller’s broker is neutral or aligned with them, they’re already wearing the wrong hat.

Things get even murkier when seller-brokers try to control financing. “Preferred lenders” are often presented as a convenience, but in some cases, steering the lender also means the broker can get paid by the lender—on top of being paid by the seller. When someone is compensated by multiple parties, incentives blur, and buyers are usually the ones most exposed.

Experienced entrepreneurs don’t confuse marketing with alignment. They don’t assume neutrality. And they don’t outsource judgment. They put on the steward’s hat—the one that asks the uncomfortable questions, checks references, and follows the incentives all the way through.

Deals don’t usually go bad because of bad intent.

They go bad because someone was wearing the wrong hat—and figured it out too late.

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