If you’re contemplating selling your business in Arizona, you aren’t alone. There is a rush to sell businesses and, as good fortune would have it, a bit of a stampede to purchase businesses, too. Almost 75% of business brokers, the professionals who manage business sales, predicted more buyers would emerge in 2022. And activity is already hot: In the Phoenix-Mesa-Scottsdale market, 327 sales closed in 2021, compared to 239 in 2019. Another 47 businesses changed hands in Tucson in 2021.
Why now might be the time
Several factors combine to make now a good time to consider selling.. Financing is readily available, and buyers and investors have more liquidity at their disposal.
What’s more, entrepreneurship is soaring. Some people are leaving their jobs to pursue what matters to them, which may mean business ownership. Nearly 25% of inquiries to business brokers are from people who are leaving the corporate world. And more baby boomers, who make up as much as 35% of some Arizona ZIP codes, are in their 60s and 70s and ready to retire, while other retirees are interested in a second career.
Preparing for a solid sale
Four steps can be useful to consider before placing your Arizona business on the market:
1. Plan your marketing approach. You’ll want to select a business broker who can present the story of your business in a way that is most beneficial to buyers— and you. What makes your competitive performance unique, appealing and lasting? As an additional benefit, when buyers can understand the logic of the deal from your sales package, it may be easier for them to secure financing from their lenders.
2. Pre-value your business before making a decision. Your business’s value likely depends on your industry and its performance in recent years. The BizBuySell Business-for-Sale Trends and Transaction Activity report lists sales by region and sector. In Arizona, many businesses are selling for just under 1 times median annual revenue and approximately 2.4 times median cash flow.
3. Consider working with your banker. As specialists in a variety of industries, relationship bankers have the expertise to offer valuable insights before you go on the market or close a deal. Plus, they know you and likely have taken time to understand your goals and ambitions for your business. When it comes to the sale, your banker is likely to be involved. In particular, if you’re selling debt along with the business, you’ll likely want to talk with your banker whether the buyer will assume the debt or it will be paid off at closing. Finally, your banker can also help assure any liens associated with credit facilities are released, if necessary.
4. Look into bank financing. These days, with an experienced buyer, some banks may be open to financing business sales. And products such as SBA 7(a) loans may be the right choice for certain small business transactions. These loans require collateral, which may include tangible assets— but in return, borrowers can take advantage of the 7(a)’s longer terms and lower interest rates.
Whether you’re just beginning to think about a sale or hiring a broker tomorrow, your banker can be a valuable member of your advisory team. Your relationship banker typically understands both your business and the current marketplace. Their experience can help you make a sale you’ll be proud of — and put your financial house in order for whatever comes next.
To learn more about how our bank can support you through a business sale, contact your Alliance Bank of Arizona relationship manager or visit us online.