Posted by Michael Morrongiello on February 14, 2001 at 21:24:28:
When at all possible you want to deal with PRINCIPALS and not brokers. Principals fund deals with their own money or money that they control. They are investing funds for their own long term portfolio purposes and not necessarily to resell their paper. Like our firm, they make their own internal underwriting & funding decisions and are not subject to the whims of having to “pass the potato…” to another funding source.
Brokers are NOT in control of their own funds, they shop deals in an attempt to try to place them. In some cases that can work out great for a seller who has little in the way of establish contacts, funders, or the time to find a funder, etc.-however it comes at a price, namely the brokers fee for placing the deal.
Since Brokers do not fund deals themselves, and are not really purchasing the paper themselves, there is a tremendous capacity for problems to develop from misrepresentations, mis-statements, promises, etc.
Hope this helps,