IBA, as the premier business brokerage firm in the Pacific Northwest, is firmly established as a respected professional service firm in the legal, accounting, banking, mergers & acquisitions, real estate, and financial planning communities. Periodically, we will post guest blogs from professionals with knowledge to share for the good of owners of privately held companies & family owned businesses. The following blog article has been provided by Oliver Kotelnikov. Mr. Kotelnikov is IBA’s lead business broker for North Central Washington (www.ibainc.com):
The Subtle Art of Selling a Business in North Central Washington
Location, location, location. This age-old nugget of entrepreneurial wisdom has become so engrained we don’t question it. But while still true as ever in a retail business model, what does location mean for other industries? Does a manufacturing company benefit from curb appeal and street visibility? How important is high foot traffic for a plumbing, electrical, or roofing business? Are there hybrid business models incorporating elements of retail, service, manufacturing, and distribution sectors requiring a multi-functional facility with a showroom, convenient freeway access, and secure parking for the company vehicles? Owners expecting to sell a family business and/or a privately held company for maximum market value must zoom out even further, and understand the role of the location, or the geography of the business on a level beyond what meets the eye. The character of the community, the quality of the schools, cost of living, and lifestyle and recreational amenities will all impact the desirability and the market demand for the business. Fortunately, from quaint coastal communities to bustling mountain towns, the Pacific Northwest is rich in options. One area that I have enjoyed personally, and where I have excelled professionally facilitating numerous transactions over the years, has been North Central Washington. Chelan, Okanogan, Grant, and Kittitas Counties have consistently produced quality business opportunities that have generated high market demand and sold at a premium. The fishing on the Columbia, the sweeping views of the Cascades, and the lifestyle perks of the Methow Valley were included in the purchase price and played an important part in getting these deals done. The article below recaps several of my successfully completed transactions in the area with key takeaways for business owners in smaller markets seeking an exit.
Lumberyards & Home Improvement Centers
Methow Valley Lumber has been a pillar of support for the communities of Twisp and Winthrop for over 50 years. For second generation owners Larry & Heidi Walsh, the decision to retire meant putting their family legacy in good hands. While the business was large enough to peak the acquisition interest of larger competitors and private equity funds, the sellers wanted an owner’s presence. A name and a face, and someone who understood what life in Methow Valley was all about. When their nephew Brady Gardner expressed interest in buying the company, the pieces of the puzzle started falling into place. Originally from Twisp, Brady and wife Kristie saw the purchase as an opportunity to move back to the Methow Valley to raise their family. Brady’s ability to run the business was never in question. A stellar career in the construction industry made him a perfect successor from the standpoint of operational knowledge and experience. But it was the sense of place and a deep connection to the community that tipped the scales. Methow Valley Lumber proudly remains under third generation family ownership.
Skilled Trade & Commercial Services
Grant County is traditionally known for farming and agriculture. At $.06 per kilowatt, it’s also home to some of the cheapest electricity in the nation. This attracts the high-tech sector and produces an interesting commercial tenant mix for Quincy and the surrounding areas. Chicken farms and server farms operating side by side, Dow and Nasdaq companies playing in the same sandbox. All have electrical needs. As a commercial & industrial electrical contractor and a third-generation family business serving the area for nearly 70 years, Tobin Electric was positioned for growth. But growth and retirement don’t align well, and retirement is what the Tobin family was looking for. A strategic merger with Holmes Electric proved to be the right fit for an exit strategy accomplishing the following goals for ownership: 1. Preserving the legacy of the multi-generation family business. 2. Receiving maximum market value for the business and the associated commercial property. 3. Smooth transition at the helm with uninterrupted service to clients. 4. Continued employment for the Tobin Electric team under new ownership. The compatibility of company cultures is the key to a successful merger of two businesses. Holmes Electric is a large company with family business values. After several initial meetings and conversations, synergies were apparent and agreement on the terms of the deal was reached.
Niche Retail Companies
Performance Footwear, Winthrop Mountain Sports, and Lake Chelan Sports are all highly successful privately held companies serving the active apparel and outdoor recreation space. Whether they are location-based retail or retail-based location businesses is a matter of opinion. But in a place where exploration and outdoor adventure are a way of life, these companies are essential. Mother Nature has blessed the area with rugged beauty and all four seasons. From hiking, fishing, and waterskiing in the summer to snows sports in the winter, the stores maintain a consistent business cycle year-round. Successful single location retail businesses remain popular on the market and continue to see buyer demand. Though interest from the investment and private equity groups is common, historically such businesses do better under the watchful eye of a knowledgeable owner operator. After nearly 40 years under original ownership, Winthrop Mountain Sports was purchased by Eric Bjornsen. Eric is a former U.S. Olympian who grew up skiing the expansive cross country trail system of the Methow Valley. Can you think of a better advisor on outdoor gear and trail conditions in the area? The unparalleled local knowledge is only one of many reasons why these generational businesses continue to flourish. Contrary to common belief, not all brick-and-mortar businesses are losing ground to online retailers or going extinct. Many continue to thrive and consistently outperform the online competition on service, product selection, and the quality of the overall customer experience.
The Manufacturing Sector
In 2024, the domestic manufacturing sector contributed about $2.35 trillion to the U.S. economy. Of that, approximately $65 billion came from Washington state. Our primary industry drivers include aerospace, electronics, agriculture, and renewable energy products. By volume, some of the largest producers in the nation are based in Washington. But small businesses and generational family-owned enterprises remain the backbone of our regional manufacturing industry. Regardless of size or sector, every business needs a sign. Graybeal Signs in Wenatchee has been the go-to sign maker to the North Central Washington business community and painting the region for decades. The business model was simple and effective: a one-stop shop for all signage needs coupled with great customer service. The extensive in-house fabrication & manufacturing capabilities set the company apart from the competition and allowed this family-owned enterprise to facilitate larger, more complex projects regionally and nationally. Quality manufacturing companies remain in high demand, commanding premium market value at the time of sale.
Wineries, Breweries, and Distilleries
Washington is the second largest wine producing state in the nation. We have over 1000 wineries making 17 million cases a year and contributing just under $10 billion to the regional economy. Craft breweries, distilleries, and cideries dot the map from the coast to the Cascades. Some of the most inspiring origin stories of entrepreneurs daring greatly come from this space. Dreamers turning passion projects into wildly successful businesses and lasting legacies are commonplace. So are high attrition rates, lost fortunes, and stories of spectacular failure. Many begin like this: John Morgan was a wine enthusiast. Happy and successful in his career as a civil engineer, he decided to start a winery. And then the grapes go sour…Instead, Lost River Winery was born in Mazama under three feet of snow in 2002, and the rest is history. Today, Lost River Winery is a pillar of the collective Washington wine story. Their staple varietals of Grenache Rose and Walla Walla Syrah win awards. The proprietary blends of Rain Shadow, Salish Sea, and Cote-Wall are carried by national distributors and sold at retail stores and restaurants throughout the state. Many new and vintage offerings, including the one and only Community Red, continue to be sipped, paired, and enjoyed at the original tasting room and shipped to wine club members. The wine and spirit business transcends industry categories, often operating at a cross section of retail, distribution, manufacturing, and hospitality. When time came for John to retire, Rick & Joanne Coursey, who owned a small vineyard in Oregon, were a natural fit. The Coursey family grapes are in the mix for the next chapter of the Lost River legacy.
The Hospitality Industry
The hospitality industry formally consists of five different sectors: food & beverage, travel & tourism, meetings & events, recreation, and lodging. To recap, these businesses are responsible for feeding, housing, enlightening, transporting, entertaining, and connecting us in a way that is vital to our everyday lives. Retail restaurants in particular form the bedrock of many neighborhoods and help foster a sense of community. The Ellensburg Pasta Company is the quintessential gathering place on Main Street in Ellensburg. People know the menu by heart, and everyone in Ellensburg has celebrated a milestone or watched a ballgame here. But the location of the business is central to more than just the city of Ellensburg. The restaurant draws on the client base in every direction. The communities of Wenatchee, Leavenworth, Moses Lake, and Yakima are all within earshot. Drivers travelling the I-90 corridor from Seattle to Boise and every place in between are regular customers. The neighboring Central Washington University and the regional business community provide opportunities for catering and special event engagements. Rapid demographic growth, community-centric living, and reasonable housing costs are also compelling reasons to own a business in Ellensburg.
If you have questions relating to the content of this article or the process associated with selling or buying a company in North Central Washington, Oliver Kotelnikov would welcome the opportunity to talk with you. Mr. Kotelnikov can be reached at (509) 293-3465 or oliver@ibainc.com.
IBA, the Pacific Northwest’s premier business brokerage firm since 1975, is available as an information resource to the media, business brokerage, mergers & acquisitions, and real estate communities on subjects relevant to the purchase & sale of privately held companies and family owned businesses. IBA is recognized as one of the best business brokerage firms in the nation based on its long track record of successfully negotiating “win-win” business sale transactions in environments of full disclosure employing “best practices”.