Carey Davis with Transworld Business Advisors

Intro: [00:00:07] Broadcasting live from the Business RadioX studios in Atlanta, Georgia. It’s time for Buy a Business Near Me, brought to you by the Business Radio X Ambassador program, helping business brokers sell more local businesses. Now, here’s your host.

Stone Payton: [00:00:32] Welcome to another exciting and informative edition of Buy a Business Near Me Stone Payton here with you this afternoon. Please join me in welcoming to the broadcast with Transworld Business Advisors, Mr. Carey Davis. Good afternoon, sir.

Carey Davis: [00:00:50] Hi, Stone. Good afternoon.

Stone Payton: [00:00:52] Man, it is such a pleasure to have you on the show. I’ve really been looking forward to this conversation. I got a lot of questions. I don’t know that we’re going to get to them all, but I do think a good place to start would be if you could articulate for me and our listeners mission purpose, What are you really out there trying to do for folks, man?

Carey Davis: [00:01:15] Well, I’m based in New York City and. And on the one hand, there is some things unique about owning and buying and selling a business in New York City, and in other cases, it’s like anywhere else. But one of the unique parts of New York is that we attract people from all over. So we’re making good deals between good people. And very often those people are from way different places. In fact, we’ve seen recently and this is raise my eyebrows over the past couple of months in talking with friends of mine who are immigration attorneys, the number of buyers of business in Europe who want to be in New York because of the war in Ukraine has increased dramatically. You see, it’s just not it’s not just a war in Ukraine. It’s a war in Europe. And just like previous generations, people want to come to the United States because of the strength of the economy here and the strength of opportunity here. So we have a lot of businesses. You take that increase in interest of buyers. Now, let’s talk about sellers. The pandemic stirred things up.

Carey Davis: [00:02:45] Their business. Their many business. Besides the sadness and tragedy of the health idea. But how did it affect small businesses? Many small businesses closed. Many businesses started new with lower rents. Right. Right. And and many people. Many people, mostly baby boomers. Sat there and said, What the heck am I doing running this business? My kids don’t want it. I want to sell. I want to go travel. I want to. So the pandemic really shook things up. So we have a lot of businesses that people want to sell because they they want to move on with their life. We have new buyers coming in. Because of the international situation. And we have through many places in the United States, of course, an increase in immigration. So we have a lot of multicultural buyers of businesses. So all of that, you know, there’s an old, old saying. Stone When when there’s change, there’s opportunity. Well, there’s a hell of a lot of change going on. And that means there’s a lot of opportunity for folks to buy, to sell and to franchise businesses.

Stone Payton: [00:04:12] So what’s the backstory, man? How did you find yourself in this line of work?

Carey Davis: [00:04:18] Well, I’m happy to tell you, as a brother radio person, I was in the radio business, radio management business for many decades. I grew up in the business. My family owned a very strong, successful small market radio station in downstate Illinois. And after college, I worked there for a while, but I had my eyes on the big city. I wanted to I just wanted to be in New York City. So I moved here and got a good job with news and talk radio stations and ended up working for KGW Newsradio in Philadelphia and then promoted to their sister station as general sales manager of 1010 wins, which is a powerful radio station in New York City and all news radio station, you kind of kind of the WSB of New York, I can relate to you in Atlanta there. So and then I made a move to be general manager of Spanish language radio in New York. So I’m I’m very, very aware of the multicultural situation in the country. So after. That leads us to about ten years ago when really the radio, the terrestrial radio business, I think, kind of moved on to a place that I didn’t want to go to. Through consolidation and downsizing and moving to Internet. I was from the days of strong, powerful AM and FM radio stations, and I just thought it was time for some new folks to come in. So I love business and I got to stay busy. So that’s when a bunch of us got together with Eric Strauss and Eric bought the franchise for Transworld in New York City. And so we have a great team of people who’ve known each other for 20, 30 years. So we just transferred from radio advertising, marketing to marketing and selling and helping people sell, buy and franchise businesses.

Stone Payton: [00:06:38] So do you feel like that experience base though, has helped you and in retrospect, really prepared you to be of tremendous service in this world? Was that background helpful for you?

Carey Davis: [00:06:51] Oh, absolutely. Because, for example, a secret of, well, let’s say let’s take a rule of radio. Tell him what you’re going to tell him. Tell him. Tell him what you told him. Right. It’s very. You keep the message focused in as you do in your program, Stone. You repeat the message, so you’re getting frequency of it, and then you’re reminding of the message. We have the same thing in selling of a business. There are strict steps that go in order. The first is the planning stage. Then there’s the search stage. Deal making and then closing. So there is a process into putting on a radio program, and that could be news or talk or what the playlist is at any type of music radio station. And there are rules involved in the steps to selling a business and getting a business prepared to be sold. Imagine that I’m talking about sales process, but if your listeners are haven’t listed their business for sale yet but are thinking, well, maybe I’m I’m five years away. That’s a great time to get started. In planning the process.

Stone Payton: [00:08:20] So what are you finding the most rewarding about the work, man? What’s the most fun about it for you?

Carey Davis: [00:08:29] Well, I think it’s helping. It’s. I’m meeting people who have. Created and worked. Very hard and their life. Who are their businesses, their baby. They have. Given everything. You know, this is many, many of these hardworking folks are like the, you know, the grocery stores or the corner store in the city where you live upstairs from the store. And and and it’s people define. I’m not saying that it’s the right thing to do. I don’t do it now, but I did use to do it. People define their life often by their work. Yeah, right. They put that much into it. So when you’re saying, okay, when when you built this baby up and top of my mind, I’m thinking of a moving company, for example. A client that we have emigrated here. From another country. He worked again, his first truck. He moved it. And 40 years later. He’s one of the largest moving companies in New York. And now it’s time to sell that business. That is his baby. Right. Right. So you have to get along with your broker, Right? You better get along with your broker because it is not easy. It is it is not easy to sell a business. And I wish I wish we could say that we sold all the businesses that we list. That’s not the case. It’s not nearly the case. I’d say we sell about on a national average, About one third of the businesses that get listed for sale actually sell. Why is that number so low? Some people think that’s a low number. Others told me they thought it was high.

Stone Payton: [00:10:42] It sounds low to me.

Carey Davis: [00:10:44] Yeah, it is low. And I wish I wish we could say it’s higher, but I’ll be straight with you. It is about 30% of the businesses that are listed for sale. Finally end up end up selling the biggest reason for not selling. Is that the seller? Has is asking too much money. And we have told people. We’ll give you what we consider a fair listing price when we’re talking about, okay, I want to sell my business. We’ll take a look at the trends the last year compared to the year before. What are the add backs, the employees that are staying on, etc. And I can go through that list, but after we review that, we will recommend a listing price and sometimes they’ll come back and say, Oh no, I was looking for $5 Million and let’s say we’re we’re recommending a listing price of $2 Million. We won’t take the listing. And so it’ll go unsold. We know this. The businesses that do sell. Have been priced appropriately. That’s a different way to look at it. If we look at the businesses that have sold and this goes everything from drugstores to dog walking services to nursing home maids to restaurants, etc., when you combine all categories and you look okay and Transworld is a big company and we sell more businesses than anybody else when we look, let’s say, All right, let’s take a look at the small businesses that have been sold. The thing that’s in common is what they sold. They were priced appropriately.

Stone Payton: [00:12:40] So you mentioned timeline a few moments ago. What is a prudent timeline? For example, I own 40% of a pretty successful media company. My business partner is Lee Kantor. He and I own the business radio network. How far out should we be preparing if we want to turn around and sell it to our studio partners or out on the on the marketplace? Because it’s not next month, right?

Carey Davis: [00:13:04] Yeah, no, I agree with you. Well, first of all, it depends. A couple of different answers to that. One of the first things a prospective buyer says to me and to the seller. If your business is so good, why are you selling it right? That’s a good question. It’s a fair question. What is the motivation for the sale? And when we look at. Again, we study all the businesses that have been have been sold or businesses that we have listed and we look under what’s the motivation for sale? We find. That when there is a motivation. Of sickness, divorce. Retirement. Those have a higher percentage of selling rather than. Um. I would just like to see what. What kind of response I would have. So when there is a. And I think one of the reasons Stone is to you and your partner should say, and other people who are listening, who are thinking about when do I sell my business? I would say, keep running your business as long as you’re you’re happy and healthy and profitable. You like what You’re doing. Great. Keep doing it. And there are things you can do to prepare for, let’s say, well, maybe things change and things can change in a day, but let’s say things. You’ll be ready in about four years. Well, there’s a lot you can do in the next four years to get a business ready for sale. A lot you can do. Don’t wait until that day comes. There’s a lot you can do to prepare for that. And here are some of those things. We look at the multiples, look at the sales price. Successful sales of companies have kept good records. Keeping historical records of your business is mighty important. It’s not just for your taxes. But when it’s time to sell, when the buyer comes in and here are annual reports that you’ve done. In other words, we’ve downloaded your brain. You’ve downloaded your brain every year with an annual report that’s valuable to the new owner coming in.

Stone Payton: [00:15:48] I’ll bet it is. So. So there’s you helping an organization sell their their business. But then there’s also you have to attract new clients. Have you kind of cracked the code? The whole sales and marketing process for you attracting new clients?

Carey Davis: [00:16:09] Well, I yes, I’m a strong believer in networking. Hmm. A strong believer in networking and. And. And talking to people. One. My, my, B and I networking group. And if your listeners are not familiar, that’s Business Network International, which is a strong networking group. Ours happens to be the largest in the country. And we refer $1,000,000 every month to fellow members. We have 85 people in the chapter, and I’ve been in this group for ten years, and some of my strongest leads come from people in the chapter. Hmm. And for example, I we’re all plugged into each other. I will say, like I did in our meeting yesterday, I’ll say, Who fixes your car? If you know, a car repair. Body work or gas station owner who’s a baby boomer. Please introduce me. And guess what? You know, out of 85 people, three or four. Know somebody. Yeah. You know, they’re close to their their car repair guy and he’s. He’s, you know, is a baby boomer and is thinking, you know, he wants to move to Florida next year. That’s a perfect introduction. So. It’s different than a big difference between a real estate broker and a business broker. Is that the real estate ad is public. The business saying of a business is confidential, so you don’t hear about business brokers that much.

Stone Payton: [00:18:00] Yikes. Yeah. That really right? Yeah. So that’s got to be that’s a whole different ballgame, isn’t it?

Carey Davis: [00:18:06] Exactly. I can’t tell you that. It’s the. That’s the body shop at Amsterdam and 103rd Street that’s for sale. I’m not going to say that publicly.

Stone Payton: [00:18:17] Yeah.

Carey Davis: [00:18:18] I’m going to say there’s a gas station in Manhattan. For sale with a great lease. You know, you have to have a good lease if you’re going to have a successfully sell a business unless well, I’ll get into that later. But you have to have a. The ad is confidential, so we only give enough information publicly. So those buyers interested, really interested, will contact us. Then they will sign the legal document of a non disclosure document and then we’ll. And then we’ll give them the top line a little more detailed information. So who The buyers of businesses. Let’s take that example of a car repair place that’s doing. Who? Million dollars a year, you know, some big some big numbers. And they’re taking, you know, 500,000 to the bottom line. This is not a small business. Some car repair businesses are doing great. Imagine. The supply chain issues going on with new cars that are not being delivered. Car repair businesses are booming right now, so they can’t get out of the way of the businesses. A lot of people, except for a lot of immigrants, are not moving into the business. So you have a lot of young folks from other countries who are very well qualified to own this. And you can get good SBA funding for those people who qualify. So. Who are the types of buyers for businesses? Again, we use the example of a car repair business. Number one, there could be a car repair business on the other side of town and they’re interested. So they would have two locations in your city, right?

Stone Payton: [00:20:23] Hmm. Yeah.

Carey Davis: [00:20:24] Next would be, let’s say there’s a body shop nearby that could be now turn into a body shop and car repair. Third. And here’s here’s an important one again during the pandemic. There will be buyers in other industries or foreign buyers, for example. We’ve got people from Wall Street in New York calling us all the time. They want to get out of that business. They want to own something. They may not know the pool business or elevator service business or moving business, but they want to own that type of company. What makes them a possible owner and could make a sale successful is that if that company’s number two employee. Not the owner, but the number two employee would be staying on. Ah, right then. Someone from outside of the business. Could could buy it. So there’s the another reason why you don’t want to tell people your business is for sale. You’ve got to keep it to yourself. Keep your mouth shut. Pick a broker. May not be me, but pick one. Give them the exclusive listing and then at the appropriate time. When a deal is made, there’s going to be an that’s when you talk to the top employees, because we have this strange thing in America of when a company is sold, people think they’re going to be laid off, when in fact, though, we hear horror stories like Elon Musk, etc.. But normally buyers want the employees to stay on. They don’t want them to leave. They’re desperate to have them stay on. Yeah, right.

Stone Payton: [00:22:28] So tell me a little bit about deal structure. I bet you’ve seen a lot of different kinds of deals and it’s not always here’s a check, Here’s the keys, right? I mean, sometimes even the owner might even hang out for a while, Right, to help them transition.

Carey Davis: [00:22:44] Well, Oh, absolutely. When we hear that the seller is willing to stay on as an employee or as a consultant. But at their own hours, the hours they choose, that can be the key to a successful sale. Hmm. So. Absolutely. I’m trying to think of a of a business right now that I don’t want to divulge anything.

Stone Payton: [00:23:18] But that’s okay. But they could also but an owner might even be able to finance a piece of the deal, too, right?

Carey Davis: [00:23:24] Yeah. Seller financing is very common. Very common. Let’s let’s just give an example on this, okay? Let’s say business. Let’s say a shoe store. Take a shoe store there. The owner puts in her pocket 250,000 a year. That’s what we say. She puts in her pocket $250,000 a year. Mm hmm. A listing price, maybe 500,000. Now. Maybe she won’t. Maybe she tells us, Oh, I want $1.5 Million. And we said, Don’t sell, don’t sell the business then. But a decent listing price would be 4.99, even like at 1000 under that. For a company that’s 250,000. And we would say a buyer could come in. Put down 200,000. And then they would pay a certain amount every month over three, four or five years. Add an interest rate. This is a loan. Maybe 6% interest rate. Mm hmm. And so you would have seller financing available. And that’s often the case when it may not be qualify for an SBA loan, for example. So seller financing is one. Or somebody we see deal structures happen where let’s say it’s listed the the business this the seller is putting 250,000 a year in her pocket. She’s listed the business at 500,000. She’s motivated to sell. And. A buyer comes in and I’ll say and says. I’ll pay 300,000 cash. And maybe a quarter on the right day. And she accepts because she was highly motivated.

Stone Payton: [00:25:40] Right before we wrap, I’d like to leave our sellers in particular. I’d like to leave them with a. With a few pro tips for helping them get their company in shape before they even listed for sale. You touched on a couple of things earlier, but just some things for people like Lee and I to be thinking about because we’ve got to get our ducks in a row if we’re going to get the top dollar and the deal we want. Right.

Carey Davis: [00:26:08] Right. Well, all right. So what are the relevant facts? What is the reasonableness? Does it pass the smell test? Does it make sense? Have you kept good records? What’s the profitability of the business? And here’s one stone. Somebody buys a business because of the upside potential they see. Now, what they pay for it is how you have performed. But the reason they buy the business is because of the upside potential. So you even though you’re not taking it there, they’re going to the buyer is going to take it to that point. You should know where that upside potential is of your business. Hmm.

Stone Payton: [00:27:01] Right, right, right.

Carey Davis: [00:27:03] Keeping good records. Get those personal expenses out.

Stone Payton: [00:27:10] I resemble that remark.

Carey Davis: [00:27:12] Right. Get those. Get those personal expenses out of there. Keep great records. What’s the growth potential? How’s the equipment, the location, the lease. The staff is very important. I consider this. I consider your key staff members assets to the company, not costs. Because if somebody who’s not from the radio industry comes in, or even if they are from the radio industry, if you’ve got a great number two person working there, then that’s an asset for the company.

Stone Payton: [00:27:50] Oh, absolutely.

Carey Davis: [00:27:52] Right. What’s the competition doing and what’s the overall management? And this may sound strange, but the less the owner does in the business, the better. Because when we list a business that we can say absentee owned, Oh man, do we have a lot of people interested in that?

Stone Payton: [00:28:17] Yeah, no, it makes perfect sense. But you’re right. At first it sounds a little bit a little bit counterintuitive. All right, man, if our listeners want to reach out, have a conversation with you about any of these topics, what’s the best way for them to connect with you?

Carey Davis: [00:28:30] Oh, please email me. And it’s C Davis. At T WorldCom. C Davis. A t, WorldCom.

Stone Payton: [00:28:42] Carrie, thank you so much for sharing your story with us and investing the time to share your insight and your perspective. This has been incredibly informative and you’re doing good work, man. We sure appreciate you.

Carey Davis: [00:28:56] Thanks, John. And the best to you and your staff and your partner and your listeners for the new year.

Stone Payton: [00:29:03] Thank you. All right. Until next time, this is Stone Payton for our guest today. Carrie Davis with Transworld Business Advisors. And everyone here at the Business Radio X Family saying we’ll see you next time on Buy a Business near Me.