What 5,000 Business Sales Taught Dennis Hayes About Buying and Selling Companies

Jared Johnson sits down with Dennis Hayes, co-owner of WCI Business Sales, the oldest business brokerage firm in Arizona. Dennis shares what he has learned from a firm with 60 years in business and more than 5,000 closed transactions, what he is seeing in today’s competitive market, and how his perspective changed when he went from representing sellers to buying an 80-year-old business with his son. Dennis explains why good businesses are creating what he calls a “feeding frenzy” among buyers, why owners are holding onto their companies longer, and why strong listings can attract serious interest almost immediately. He also breaks down one of the biggest problems he sees when sellers come to market: sloppy books and records. Jared and Dennis dig into Quality of Earnings reports, seller add-backs, financial due diligence, and why buyers should never assume the numbers they are given tell the whole story. Dennis explains why he believes buyers are ultimately purchasing a known and reliable revenue stream and why understanding where that revenue comes from and whether it will continue after closing should be central to due diligence. Dennis also walks through the acquisition he recently completed with his son. After selling the same Phoenix cooling business eight years earlier, Dennis found himself on the other side of the transaction when the owner was ready to exit. He shares how they evaluated the opportunity, why a Quality of Earnings report became essential to getting the deal done, and what they learned after taking over the 80-year-old company. Jared and Dennis also discuss buying commercial real estate alongside a business, how real estate values can outgrow the cash flow of the operating company, why buyers and sellers need to disclose problems early, and the surprises that can surface late in a transaction. They close with Dennis’s perspective on mentorship, training the next generation of business brokers, and why closing day still motivates him after decades in the industry. Main Takeaways: - Quality businesses are attracting significant buyer interest, while good listings are becoming harder to find - Business owners often sell for personal reasons rather than business reasons, making listing volume difficult to predict - Sloppy books and records remain one of the biggest deal killers in small business transactions - Running personal expenses through a business can lower taxable income but ultimately reduce the value a seller can substantiate when it is time to sell - Quality of Earnings reports can provide clarity when tax returns and internal financial statements do not accurately reflect the economics of a business - Buyers should independently verify financial information and should not rely on a broker to perform their due diligence - A buyer is ultimately purchasing a known and reliable revenue stream, making the sustainability of that revenue critical - Hidden liens, financial issues, and other surprises are likely to surface before closing, so sellers should disclose problems early - Commercial real estate can be a valuable part of an acquisition, but the business still needs enough cash flow to support both the company and the property - The value of commercial real estate can sometimes grow faster than the cash flow of the business occupying it, creating challenges for future buyers - Dennis’s own acquisition showed how strong financial diligence can turn a complicated opportunity into an attractive deal - Mentorship and continued learning remain important even after decades of experience and thousands of transactions - Business ownership is not for everyone, but for entrepreneurs who enjoy solving problems and building value, the work itself can be rewarding Episode Highlights: \[00:00] Why good business listings are creating a feeding frenzy among buyers \[00:05] Dennis’s background and the 60-year history of WCI Business Sales \[00:13] What Dennis is seeing in the Phoenix business brokerage market \[00:29] Why listing volume has become increasingly difficult and owners are holding onto businesses longer \[00:51] The number one problem Dennis wishes every seller would address before going to market \[00:53] Sloppy books, personal expenses, and the impact they can have on business value \[01:03] When a Quality of Earnings report can help establish what a business actually earns \[01:23] What buyers should know about financial due diligence \[01:35] Why Dennis believes buyers are purchasing a known and reliable revenue stream \[01:43] How Dennis went from selling an 80-year-old cooling business to buying it with his son \[02:17] Why a Quality of Earnings report was essential to completing Dennis’s acquisition \[02:37] The surprises that can surface late in a transaction and why sellers should disclose problems early \[02:53] What buyers should consider when commercial real estate is included in an acquisition \[03:23] How real estate values can outgrow the cash flow of the operating business \[03:43] Why including real estate can change the financing dynamics of an acquisition \[03:55] The mentor who taught Dennis the business brokerage industry \[04:15] What still motivates Dennis after decades of buying, selling, and advising businesses Connect with Dennis Hayes: Website: https://wcibroker.com/ Connect with Jared: If you have questions for Jared, visit:https://jaredwjohnson.comhttps://jaredwjohnson.com LinkedIn:https://www.linkedin.com/in/jaredwjohnson/https://www.linkedin.com/in/jaredwjohnson/ DISCLAIMER: The views and opinions expressed in this program are those of the guests and host. They do not necessarily reflect the views or positions of my employer. Keywords: business brokerage, buying a business, selling a business, Dennis Hayes, WCI Business Sales, Arizona business broker, Phoenix business acquisition, quality of earnings, QoE, business valuation, seller discretionary earnings, add-backs, business acquisition due diligence, SBA lending, commercial real estate, business acquisition financing, seller accounting, business buyer, business seller, entrepreneurship through acquisition, ETA, small business acquisition