The number of businesses changing hands is increasing and is likely to remain strong as more people relocate to the Spokane market, observers here say. 

Doug Miller, vice president of buyer experience at the Coeur d’Alene office of merger and acquisitions management company Exio, says one of that company’s metrics for potential buyer interest has increased significantly. 

“We just set a record for July. We hosted a total of 35,656 people who came onto our seller’s portfolios to look at them,” Miller says. “This represents an 80% increase over our typical month in 2020.” 

At Murphy Business Northwest Inc., a local affiliate office of Clearwater, Florida-based business brokerage Murphy Business & Financial Corp., broker Brian Southworth says he’s fielding the most inquiries he has since he established the office here in 2014.

Southworth says it’s the opposite of what he’d originally expected from business sales during a pandemic.

“In March 2020, when everything got locked down, that first week, my phone rang one time. It was a client whose restaurant I had listed, and he asked me if we’d pull the listing,” Southworth says. “And I thought, well, that’s it, it’s over. Everything was doom and gloom. The next week, my phone started ringing, and I’ve been busier than I’ve ever been since.”

Brokers here say there isn’t a central, reliable source for data on private business sales activity. 

However, some markers hint at a rise in interest from people looking to buy businesses in the Spokane-Coeur d’Alene area, he says. 

As of Aug. 10, PitchBook had recorded eight company acquisitions in the Spokane-Coeur d’Alene area so far this year. Proprietary market data software subscription platform PitchBook tracks public and some private merger and acquisition data. 

The 2021 activity is on track to exceed the nine Spokane-area transactions PitchBook reported in all of 2020. 

The eight acquisitions PitchBook recorded are: 

•SharperLending, of Spokane, acquired in January by Philadelphia-based UniversalCIS.

•Cascadia Custom Molding, of Coeur d’Alene, acquired in March by a subsidiary of Milwaukee-based Ritus Corp. 

•ClearRF, of Spokane, acquired March by Montreal, Canada-based Siyata Mobile.

• Eastside Electric Motors LLC, of Spokane Valley, acquired in April by Greenville, South Carolina-based Integrated Power Services. 

•Ibq Systems, of Spokane, acquired in June by Milwaukee-based Zywave Inc.

• Great Floors, of Coeur d’Alene, acquired in June by Dallas, Texas-based Artisan Design Group.

• Kontrol Payables, of Spokane, acquired in June by Atlanta, Georgia-based Realtime Electronic Payments.

•Cascade Windows Inc., the acquisition of which was announced earlier this month by Dallas, Texas-based CenterOak Partners LLC.

In addition to these companies, Southworth says many small businesses have changed hands, partially spurred on by the COVID-19 pandemic. He says the pandemic forced many people to reevaluate their lives and livelihoods.

For some, this meant developing an interest in owning a company rather than working for an employer.

“Buyers are typically in their 40s to 50s and typically have had good careers, either with privately held companies or corporate companies, and they’ve decided they’re going to take charge of their own life,” Southworth says. “I think more and more people who have corporate jobs are going to realize, I have to drive my own career.”

Miller says now is a good time to purchase a business due to low interest rates.

“There’s a lot of capital out there to buy businesses right now,” he says. “The loan rates are still very low.”

Southworth says the pandemic brought many business owners to think about an exit strategy.

“People started realizing that they eventually may not want to be running a business, there might be something else they want to do,” Southworth says.

Miller says some of those looking to sell their business are younger people who want to buy a different kind of business.

“They’re serial entrepreneurs who have created a business of value, and they want to sell and then buy another business, Miller says. “They don’t care if they get the best value, because it’s not their retirement on the line, they just want capital to go start something else.”

However, Miller says most business owners looking to sell are near retirement age.

“Baby boomers may want to sell their business and move to Phoenix where their grandchildren are, or maybe they want to move to Florida because they’re getting older and they don’t want to shovel snow anymore,” Miller says.

Jeff Johnson, president of Black Commercial Inc., the brokerage division of Spokane-based commercial real estate company NAI Black, says COVID-19 acted as a catalyst for some business owners.

“The challenges of COVID have caused some business owners to say, ‘OK, that was a struggle. I’m ready to move on to retirement,’” Johnson says.

Patrick Carter, owner of Spokane Cat Clinic, at 2704 W. Northwest Blvd., says he listed his cat-only veterinary clinic with a business broker in April. 

“I’m going to be 67 soon, so it’s about time to sell the business,” Carter says, adding that he intends to continue working part-time at the clinic after it’s sold.

Carter says an increase in demand for services prompted his decision to sell.

“The business value after COVID has gone up for a couple of reasons,” Carter says. “The amount of business we’ve been doing has gone up quite a bit. We’re busier than ever.” 

Southworth says profitability is one of the most vital factors a prospective buyer considers.

“The best time to sell a business is when revenue and profits are climbing,” he says. “A lot of people wait until they’re tired, and they just start coasting. Those are tough businesses to sell.”

A recent survey commissioned by Umpqua Bank, the 2021 Business Barometer, found that 64% of small and mid-size business owners in Spokane say they’re considering acquiring another business. 

However, Miller says Spokane is poised for more activity from buyers who come from outside of the area.

“The fact that there are buyers coming here and knocking on doors in Spokane says that there are businesses here that can be grown much more aggressively,” Miller says.

Johnson says that some move here intending to buy a business, while others prefer to purchase a business before committing to relocating to the area.

“We have a lot of people from outside of Spokane who would love to buy an operating business in Spokane so that they can relocate from the West Side or California,” Johnson says.