Great Western is one of a handful of so-called co-op advertising companies, which rank below business brokers in the business-matchmaking hierarchy and act as a kind of dating service for buyers and sellers of small and midsize businesses. By its own reckoning, Great Western is the largest such company (with the possible exception of Internet-based competitors), having signed up about 3,000 small-business sellers last year and garnered $15 million in revenues. Like business brokers, the matchmakers are unregulated or, at most, loosely regulated. In at least three states (California, Minnesota, and South Dakota), for example, regulatory boards have ruled that Great Western must have a real estate license to do business, although the Dallas-based company has continued to operate in all three states without one. (Great Western is now disputing the ruling in California, filing for "appropriate documentation" in Minnesota, and reviewing its options in South Dakota, according to the company.)
When Cal Brown was sizing up Granger and Great Western, he wasn't thinking about the niceties of regulations. What struck him at the time of Granger's visit was the sales representative's response -- or nonresponse -- to a question. "I asked, clearly, 'What percentage of people who sign the contract actually sell their business?' " Brown remembers. Granger never answered him directly, according to Brown, which troubled him.
Looking back, Brown realizes that he knew little about Great Western except what Granger had told him. "It could have been located in a phone booth," Brown says.
The Company "Fills a Niche"
Great Western's headquarters is located in a sleek, 10 story high-rise overlooking the busy Dallas North Tollway. Flanked by a recently vacated Mitsubishi auto dealership on one side and a prime-rib restaurant on the other, the building has a spacious, marbled lobby with a geyser-style fountain. Great Western's suite of green-carpeted offices on the sixth floor exudes the bland respectability of, say, an insurance agency. As it happens, insurance -- specifically, health insurance for small businesses -- is what company founder Stan Hazlewood sold before he created Great Western, in the early 1980s.
Today its owner and president is John H. Binkley Jr., who joined Great Western as a salesman in 1984 and, within four years, bought Hazlewood out. When I called Binkley before visiting Great Western in May, he told me that he was mourning the death of his 35-year-old son, Hal -- who'd been killed in a traffic accident in January -- and that he would not be available for an interview. Hal Binkley had been Great Western's vice-president of operations, his father said, and had been "basically running the business."
When I arrived at Great Western, the person who received me was the company's former lawyer, David McCreary, whom Binkley had named chief operating officer the week before. McCreary, wearing a red tie and a charcoal, chalk-striped suit, was clean-cut, with a choirboy face that belied his 33 years. Growing up in Plano, Tex., McCreary had been John Binkley's neighbor and a chum of his younger son, Ryan. Great Western is a family business, McCreary told me right away. Its 20-person home-office staff includes two of John Binkley's brothers, Hulon and Daniel.
Great Western, McCreary said, "fills a market niche for individuals who desire to sell their businesses themselves," which, for better or worse, is the route most small-company owners take. Great Western's service, he said, benefits sellers of companies whose small size or remote location results in their being "overlooked" by business brokers. Great Western, he continued, offers those sellers the means to market their business confidentially and nationally, even internationally. "We reach out to those small sellers," he said, "and provide them with the ability to reach out to a broader audience than Main Street, USA."
To reach sellers, the company sends out millions of pieces of direct mail a year. "CONFIDENTIAL. FREE FOR THE ASKING: Find Out What Your Business Is Worth NOW!" one such letter begins. To maintain its pool of 25,000 buyers, Great Western advertises by direct mail, in many newspapers and magazines (including Inc), and on the Internet. If a prospective seller responds, one of the company's 50-odd sales representatives (known as "field consultants") is likely to call the seller to make an appointment.
A field consultant who comes calling is ready to make a free estimate of a company's value, as Brian Granger did for Cal Brown. Great Western's field consultants must have at least five years of sales experience, but no business-valuation experience is required of them other than what's taught in a four-day training course, which emphasizes mastery of the company's sales presentation. For field consultants, it's do or die: they won't last long unless they make sales. Their commissions are based entirely on the contracts they sell, and they must cover traveling expenses.
In training they learn about the company's "trump card," as former Great Western senior executive vice-president Bob Elliott once told a class of trainees. He was referring to the business evaluation that Great Western offers to sellers who purchase its matchmaking service. If a business owner buys an equivalent evaluation elsewhere, it "can cost as much as $5,000 or more up front depending on the type of business," says the company's presentation guide for field consultants. In the late 1980s, after John Binkley instituted evaluations as a sweetener to the Great Western advertising contract, the company's sales shot up, according to Elliott. And why not? Few owners know the market value of their companies, and most would relish a professional valuation.
Like others who sign a Great Western advertising contract, Cal Brown initialed an eight-point statement in which he acknowledged that "there can be no accurate projection" regarding when Great Western would locate a buyer, "if ever." The Great Western fee structure nonetheless pointed to the possibility of a sale. The up-front fee was a "deposit." If a Great Western lead resulted in a sale, Brown learned, the seller would owe a larger fee, based on a sliding scale that varied with the asking price. In his own case Brown would have owed Great Western a balance of $26,525, in addition to his $8,975 deposit, if he had sold C&G to a buyer unearthed by Great Western.
