I just talked to another business owner that feels scammed by GW Equity. He paid the big up-front fee to “sell his business” but received no real buyers and not a single offer. And the business is one that should easily command scores of buyers and serious offers (if marketed skillfully). His business is a well-established manufacturer with proprietary products and consistent annual profits that exceed $1 million (revenue in excess of $5 million).
GW Equity claims to be a firm that represents people in the sale of their business. An M&A firm, if you will. To be sure, GW might helps a few actually close a sale transaction each year but when you sign up 1,000 and sell just 10 or 20 (my estimate), when each and every one of the 1,000 is expecting to be sold, is it an M&A firm or an up-front fee collection scam?
Yes, I’m in the M&A business so I might just have sour grapes. Or, I may be right. Do your own research.
My extensive research leads me to conclude that GW Equity is the most recent incarnation of a pioneering up-front fee collection “business brokerage” scam business called Great Western Business Brokers. They deny this but the principals are the same and the location is the same. Great Western was as exposed in Inc. Magazine some years ago.
The transition to GW Equity occurred when many of the Geneva Companies (Irvine, CA) executives migrated to GW (Dallas, TX). Geneva was widely believed to be a scam and was the target of a class action lawsuit that ended in a penalty being paid by Geneva.
How did my friend get taken? Well, his story is pretty typical. He did not want to use a firm in his community because of confidentially concerns. So, he found a firm on the internet that “looked good.” He had many talks with them and visited their offices in Dallas.
Yes, they’re good at “looking good”. Unfortunately, no offers. No big pay day. No sold business. Just time and money wasted.
If you want to sell your business, use someone you know or get a referral from someone you know. Someone you trust that will attest to skill, credibility and integrity.
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Yes, GW Equity is a scam. They do actually close a deal here or there but the quality of their work is very low and 90%+ of their revenues come from their up front fees. Geneva was the first incarnation and then the team formed RSM Equico, and now its GW Equity.
Because it’s a scam, the business model only seems to work for a few years until they get some nasty press and business owners start complaining. Then the team reforms under a different name.
It’s amazing to me that such a large team can act with such low integrity.
@Dave Smith
Dave Smith, how do you come to know these things?
Hold on a second here guys. I have been looking pretty hard at this company for some time now and I understand these so called “scammers” actually sold more businesses last year than any other company in the Thomson Reuters Financial rankings under the 25M range. They just can’t make up those closings, right? I double checked with Thomson Financial and it’s all on the up and up. In fact, they are the #2 highest volume seller of businesses under 50M. What am I missing here? How can they be a scam if they are actually closing all these deals?
I am not sure how I feel about all this, but I imagine that everyone thinks their business is perfect and will sell, but that is like every mom that enters their baby in a beauty pageant. Maybe there are some babies that just aren’t meant to win first place.
It just can’t be that every single baby wins first place and I don’t understand how anyone can suggest that a business broker should sell 50, 75, or 100% of their listings. It just doesn’t work that way from my point of view. Seems like regardless of whether it’s a local broker or a big company like GW Equity, some will sell and some won’t. One thing is for sure: A business will never sell if they never try regardless of whether it’s through a small town/local broker or a larger national company like GW Equity. I don’t know what is best; I guess it depends on the company, but I have serious doubt that it is as bad as you all are trying to make it seem based on the experience of one company and the exclusion of some pretty reliable data.
@dperkins@acquisitionadvisors.com
@Dave Smith
@Michael Christoper
Mr. Christoper, thank you for your post.
1) Would you be willing to disclose here (or to me privately) what you do and for whom you work? In a manner that we can verify?
2) Please tell me who you talked to at Thomson Reuters and provide a phone number. If you do this I will follow up and report my findings herein. It is my understanding that GW does NOT submit their deals to Thompson Reuters, rather makes their own calculation and mocks up their own Thompson Reuters table. Yes, these guys would do that and DO do that kind of stuff.
3) How about a 2% closing rate? 5%?
4) The GW client that gave rise to this post is just one of many that I’ve talked to.
To answer your question: How do I know that GW Equity is a scam:
1) I have been an intermediary for 10 years and have sold about 35 companies. During this time, I have come to know dozens of small business owners, many of which have fallen to the Geneva / RSM Equico / GW Equity scam. The story for these business owners is typically the same: get big promises before signing up, pay a big up front fee, receive poor or non-existant performance, and finally, be left with the eventual feeling of being “had.”
2) I am a major shareholder/partner in 3 small companies with sales up to $15 MM. I once attended an RSM Equico “seminar,” which was a total joke. Unfortunately, the joke was mostly on the other attendees in the seminar who were mostly hard working and honest small business owners. The presenter at the seminar bended the truth without conscious and I was amazed at his lack of integrity. This presenter is now an employee and presenter at GW Equity. He’s pitching the same scam under the new banner of GW Equity.
3) I have called the folks at Geneva / RSM Equico / GW Equity and have figured out their business model. They might have 100 people in the telemarketing and seminar end of the business and only 6 actual deal makers. They collect about 20 up front fees for every deal that they close. The up front fees are about $45K and the average additional commission is another $150K, so you can quickly see that 85% +/- of their revenues come from the up-front fee side of their business.
4) As an aside, as an active and experienced buyer of businesses, I actually reviewed information on many of the businesses that they have to sell. I have found the quality of the work of their deal makers to be decent or average. And, their deal makers are not scam-artists as they are not involved with signing up new engagements (note that the deal makers know that the sign-up process is a scam.) So, their deal makers are professionals, but they are far from unique or truly talented; I certainly would not recommend them to any small to medium sized business owner.
The bottom line: GW Equity is predominantly a shady business largely based upon mis-representations and a lack of integrity. But, there are lots of business models out there in other industries with similar dynamics and they all tend not to stand the test of time.
-Dave Smith
@Dave Smith
Mr. Smith, how about The March Group?
Yes, in looking at their site, I recognize at least a few of their team from RSM Equico. They definately follow the RSM Equico model. That is, they are really a seminar company looking for up front fees while pretending to be an M&A firm.
From: Dan Mytels [mailto:ackaroid@yahoo.com]
Sent: Friday, April 17, 2009 10:29 AM
To: David Perkins
Subject: Re: RSM
About 7 years ago I went to one of their seminars (as a busieness owner) because I wanted to learn first hand why and how they were burning so many people. The seminar was just outrageous.
Over the past 5 years, I have worked closely with several of their deal-makers as I have looked at close to 50 deals that they have represented. I have made offers on a few of the companies that they represented, and while I haven’t purchased a company from them, I felt that they represented a viable option for deal flow.
You see, they might sign up 200 – 500 companies a year under false pretenses, but a few of their sellers are actually motivated, and so, they get a deal done here or there. The actual deal guys know that the front-end seminar part of the business is a sham. But, the front end is very seperate from the actual deal side.
The deal guys are actually working hard to try and get deals done on behalf of their clients. It’s just that the front-end seminar guys are doing anything/everything to sign up whoever/whatever —- that’s what makes the organization shady…
Great article David, you’re one of the few deal makers that will publicly call their bluff.
1) GW does not use/advertise standard league tables
2) Mr. Smith, your posts are spot on.
3) $100 says the fourth poster is Dwight Jacobs.
@Due Diligence
Due Diligence, are you talking about the Dwight Jacobs that was a top manager at Geneva Companies and is now leading GW Equity?
Michael Christoper, you did not respond to my questions. Still, I took the liberty to contact Thomson Reuters and inquire about GW Equity. First, as an aside, GW appears to have changed their name to Generational Equity. Second, Thomson Reuters does not provide a ranking of M&A firms by the number of deals closed under $25 million. Third, I DID confirm that Thomson Reuters has GW/Generational Equity ranked #2 in 2008 for deals closed under $50M in value. Well done GW. And so, it seems that GW has begun submitting done deals to Thomson Reuters. Before, they simply made up their own mock Thomson Reuters ranking and placed themselves in it.
Finally, of note, Thompson Reuters calculates M&A firm ranking based on deal summaries submitted by the M&A firms themselves. Thomson Reuters does not verify them in any way unless a complaint is lodged.
Also of note, it appears that GW/Generational Equity may have loaded all their done deals into 2008 and thereby acheiving a high ranking in 2008. I say this because it does not appear that they were ranked at all in 2006 and 2007 and they are not ranked in 2009 (year to date).
April 14th, 2009 at 18:04 | #4 Reply | Quote | Edit Hold on a second here guys. I have been looking pretty hard at this company for some time now and I understand these so called “scammers†actually sold more businesses last year than any other company in the Thomson Reuters Financial rankings under the 25M range. They just can’t make up those closings, right? I double checked with Thomson Financial and it’s all on the up and up. In fact, they are the #2 highest volume seller of businesses under 50M. What am I missing here? How can they be a scam if they are actually closing all these deals?
The March Group just like the rest of these companies are running a boiler room with 50 people on the phones convincing you the time is right to sell your business and to go to the seminar.They tell you in scripts they give out to the tele-marketers that they have a high degree of buyer interest in your industry.This is a manufactured lie.They take upfront fees from hundreds of companies each year and bring in millions of dollars in revenues with out being able to sell your company on a timely basis.They tie you up with a 3-4 year contract.They say they are a Mergers & Acquisitions firm but don’t do mergers. They just want you to agree to sell your company and collect the fees.
David Perkins asked Mr. Merchant, “How did you come to know these things.” Mr. Merchant replied, “A friend of mine worked at The March Group for a year and he told me all about the inner workings.”
@Dave Smith
Hi David,
Any insight on Generational Equity?