Last week, business broker Brad Bottoset of Liberty Group of Nevada fielded a call from an investor headed to Reno to pursue business investment opportunities in the region.
Investment inquiries could become much more common for business brokers in northern Nevada as business people look for opportunities in what they perceive as a soon-to-boom market.
Tesla’s announcement a few months ago it would build a $5 billion battery factory at Tahoe Reno Industrial Center, coupled with news of other big-name companies relocating to or expanding in northern Nevada — Amazon, Petco, zulilly — has phones starting to ring a bit more often at business brokerages in the Truckee Meadows.
Bottoset says Liberty Group of Nevada has seen a modest uptick in calls from investors seeking to buy service-related and manufacturing businesses, though it’s still far too early to gauge the Tesla effect, Bottoset cautions. However, early indicators point to heightened interest in business ownership in northern Nevada in advance of the electric carmaker’s entry into the state.
“We are seeing increased activity, and it is expected to have an impact on value, but it’s not really measurable at this point in time,” Bottoset says.
Katrina Loftin Winkel, owner of BTI Group, has been putting in a lot longer work hours since the Tesla announcement in early September. Loftin Winkel says her team has been working non-stop six days a week.
“There is no downtime,” she says. “We have a lot more people coming into town who want to look at a number of different business. If we don’t have what they need we try to find what they are looking for.”
Inquiries to BTI Group have risen 25 percent from July 1 to date compared to the first six months of 2014, and sales are up 400 percent in the same time frame.
Loftin Winkel also says her buyer list of investors actively seeking businesses in the Reno-Sparks market has doubled. Roughly 80 percent of inquiries are for businesses in the greater Reno-Sparks area, and investors seek a mix of businesses, from tire shops to restaurants to manufacturing and distribution companies.
Last week the Web site bizbuysell.com listed 87 businesses for sale in Washoe County ranging in price from $2.2 million for a medical equipment supplier to $25,000 for a mobile carpet and upholstery cleaning firm.
Both business brokers say business valuations have not experienced any noticeable appreciation — values are based on current cash flows — but that could change if activity continues to heat up.
Business borrowing activity also is on the rise. Roger Kadz, business development officer for Nevada State Development Corporation, says that since the Tesla announcement in September NSDC has seen increased applications from small businesses for SBA 504 loans, especially from businesses related to residential home-building and residential remodeling, such as flooring, roofing, painting and engineering companies.
Since September, NSDC has submitted 10 applications to the SBA and received approval for $7.3 million in SBA participation. For the period September 2012 to December 9, 2013, NSDC had 8 submissions to the SBA with approval of $5.3 million in SBA participation.
The SBA 504 loan program requires a financial institution to loan business owners about 50 percent of total project costs, with NSDC and the SBA providing a loan typically 40 percent of total project costs. Business owners put up a minimum of 10 percent cash equity.