Aug 17, 2017, 2:40pm HST
Jim Mayfield had a long career as a commercial banker with Bank of Hawaii before buying his own small business, a brokerage where he helps others buy and sell businesses in Hawaii.
His Kauai-based Island Business & Commercial Brokerage Inc., also known as Island Business Brokers, has done so well over the past three years that it was ranked No. 17 on PBN’s Fastest 50 List this year of the fastest-growing businesses in Hawaii.
Mayfield went into business 11 years ago. He was already in the process of getting certified as a business broker when a client of his at the bank began telling him about her brokerage.
“Then about a year later, she came back in and she had fallen in love with one of her business listings and she said her business was for sale,” Mayfield told Pacific Business News. “I made the decision to buy her existing business rather than building a business from scratch. If you buy an existing business, you know what you’re getting and you have cash flow from day one.”
Thanks to a relationship with a large mergers-and-acquisitions advisory firm on the Mainland, Generational Equity, Mayfield, who is also a commercial real estate broker, has grown the business over the years. He’s also expanded beyond Kauai to handle listings on Oahu and the Big Island.
He recently told PBN that he sees more growth coming with the sale of larger and more complex businesses in the state.
How may people work for you? I have two associates. I added one in the last six or seven months.
How is selling a large business more complex? The number of potential buyers. It’s like a funnel. If a business is a $200,000 to $300,000 business, there’s a gazillion buyers. As the dollar price goes up, usually they become more specific. You get to the half million to $1 million mark, you need a down payment and people forget about working capital, so the number of buyers who have that kind of cash it dwindles.
What changes are you seeing? The industry’s changing. You have the people retiring. There’s a new grouping of sellers now. They oftentimes are younger, and they want to move faster, but they don’t have the capital to grow as quickly as they like, so they sell their businesses. Here’s what’s happening. The seller sells to [a private equity group], but the seller retains 20 to 25 percent. Now he has a larger company with more behind it and he can grow it faster.
Who is your typical client? There’s several typical clients. The first is current business owners who are looking to retire and move on in life. Secondly, there are sellers for whom there have been issues in their lives that are causing them to sell. That could be health, divorce, could be a family situation causing them to move to the Mainland. What is beginning to happen now, not just in Hawaii, is where you have younger businesses owners who sell, one because they can put some cash aside, secondly they get access to a lot more capital which allows them to grow their business faster.
What is the average listing for a Hawaii business? There is no average. I live on Kauai and I’m going to see sellers or potential sellers at Safeway, and in a small community I feel more compelled to assist business owners. So the minimum [selling price] on Kauai would be $100,000 to $150,000. Typically my businesses [on other islands] are going to be between $500,000 and $5 million, but I have one right now for $10 million on Kauai.
How do you find buyers? I can promise people that anybody who does an online search will find them listed. If you were to do a Google or Bing search, our listings would be in six of the top 10 positions on Google or Bing. Secondly, I’ve been doing this for 11 years, so I have a listing of potential buyers. These are people who are looking to buy businesses in Hawaii and are not ready to do it on day one.
Do most buyers get financing from local banks? Almost always. Even if they have the cash to buy, almost all of them get financing to buy. We have four very good banks, all of which are willing to finance local business purchases.