How AI Job Loss Is Driving a Boom in Small Business Acquisitions

Ravi Jagtiani (00:00)
Well, honestly, the market is right now full of opportunities, especially on the business brokerage side, because unfortunately people are losing jobs due to AI and they are now trying to transition themselves from the nine to five corporate job onto, you know, small business ownership. So on an average, I get at least a call or at least one or two calls per day from people who have been

traditionally in the tech business or the biotech business, what you mostly see in the Bay Area, and even other businesses as a matter of fact. And they have either lost their job or are in the fear of losing jobs, therefore they want to increase their, ⁓ add to their household income by definitely getting into a small business acquisition.

Michelle Kesil (02:22)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’m looking forward to chatting with, Ravi Jagtiani who is a business broker and commercial realtor in California. So excited to have you here today, Ravi.

Ravi Jagtiani (02:42)
Thank you. Likewise.

Michelle Kesil (02:44)
Great, let’s dive in. First off, for those not familiar with you and your work, can you share what your main focus is?

Ravi Jagtiani (02:52)
Definitely. So I started off as a commercial real estate agent, which I am also today. ⁓ I also got into business brokerage. So today I am selling both commercial real estate as well as ⁓ small businesses in particular. ⁓ And then within the small business ⁓ segment, I have created a niche in the childcare, preschool, daycare space. ⁓

I almost sell about 80 % of the preschools that get sold in the state of California all the way from San Francisco to San Diego. I have a lot of team members that work with me in different parts of California ⁓ that are my boots on the ground that take care of my tours in open houses. ⁓ And that has helped me ⁓ build a very niche and specific ⁓

industry within the business brokerage side. But apart from child care, I do sell a lot of other businesses from e-commerce to restaurants to adult daycare, know, banquet halls, a whole bunch of things. And then within the commercial literacy space, sell, you know, I specialize in triple net retail deals. know, anybody who’s looking to sell their, you know, high operational multifamily

properties and reinvest there proceeds into a triple net, know, ⁓ low involvement, triple net asset. That’s another specialty of mine. I’ve helped a lot of, you know, multifamily ⁓ owners sell their properties and get into, you know, triple net deals. I also sell ⁓ a lot of land. I have a development background.

As well, I also serve on the Planning Commission in the City of Foster City, so I understand development and land use a lot. ⁓ That has helped me create also another niche of selling land within the Bay Area.

Michelle Kesil (04:55)
Awesome. And what do you feel are some of the main keys that have allowed your business to be able to grow and run successfully?

Ravi Jagtiani (05:53)
Honestly, it’s the skills, right? I mean, at the end of the day, need to be, you need to know the, you need to like and have a passion for what you are selling. Right. So I personally, when it comes to childcare, I personally own schools, you know, so me and my group also own preschools and daycare. So I understand that business well enough to be able to

dissect the financials of a given seller and underwrite the business and therefore help the buyers make the right decision and right investment. So that’s about preschools. As far as the retail and triple net deals are concerned, I also syndicate ⁓ properties. We have a group of investors that we buy into triple net properties all over California and beyond, Texas, Arizona, etc.

So because I have a passion to own those types of properties, therefore it automatically resonates in my brokerage business and I am able to underwrite those deals and make sure that I sell them at the right value.

Michelle Kesil (07:02)
Definitely. And are you working with a lot of investors when it comes to the commercial real estate and land projects?

Ravi Jagtiani (07:14)
Yes, so as far as ⁓ commercial real estate is concerned, mostly the triple net deals are bought by the investors. As far as businesses are concerned, I work with a lot of end users, meaning the actual business operators. In the childcare space, you will see a lot of existing preschool owners trying to expand their business. So they are my clients. Pretty much everybody in the industry knows me.

as a broker, then there are a lot of tech people or biotech people or other people that are trying to transition out of their nine to five jobs and get ⁓ into small business ownerships. They become my clients because childcare is one of the most attractive industries to buy into. ⁓ a lot of these types of business potential buyers are

⁓ evaluating what industry that they should invest in. And that’s where I guide them and then more than likely they narrow it down to preschools and daycares. ⁓ As far as land is concerned, they are a completely different type of buyers. Mostly I’m dealing with developers within the Bay Area to buy the piece of land. Those transactions take much longer. ⁓

Typically the closing timeline for a land transaction is anywhere between 12 to 18 months minimum.

Michelle Kesil (08:41)
And how do you find the land?

Ravi Jagtiani (08:45)
So I only work on my listings, right? More than likely. So ⁓ I am somebody who focuses more on getting the listings in the first place. So I have a lot of listings around childcare, land, know, triple net assets. ⁓ So typically they are my listing. Now, obviously I have a specific buyer need that is looking for a specific property, you know, and I don’t have a listing in that.

neighborhood or that geography, then I will go and search for it, right? I mean, obviously we use the typical sites that, you know, house these commercial properties like CREXI and LoopNet and CoStar. But apart from that, have, like I have a, because I’ve created a niche in these verticals, I have a good database of, you know, brokers and property owners to reach out to whenever I have a…

specific requirement to see if they’re looking to sell their properties.

Michelle Kesil (09:41)
What are the biggest obstacles or challenges that you have to face and overcome in this role?

Ravi Jagtiani (10:23)
Well, depends on the type of ⁓ asset type I’m selling. Everything has its own ways and means of getting the deal done, right? So for example, land, there’s a lot of bureaucracy in California to get the land entitled, which is why most of the developers would put a long-term contingency period.

followed by a much longer closing period. So obviously these transactions have a much longer escrow closing timeline. And a lot has to happen within that timeline, right? From the developer putting up a preliminary application to the respective city, wherever the property is, to understand whether his vision for that development is actually going to come true.

Right? Whether he, whether if he’s say, thinking of, you know, coming up with, you know, 10 single family homes on the property or a 90 condominium unit on the property, whether his calculations are in line with what the city will allow him to build on it. So to figure out all that, to discover all that, takes months and months. Right? So that is why those are some of the challenging things of selling land. When it comes to selling businesses.

There are lot of different ⁓ loops that you need to ⁓ cover. ⁓ First step is to obviously underwrite the business at the right valuation to dissect the financials. Once you do have a buy-in contract, then there are various contingencies in place before the deal closes. The first set is obviously your due diligence and financing contingencies.

The buyer has come through with that. They’ve got their loan approved. Typically, it’s an SBA loan. ⁓ Then the second stage is to move forward with the leasing part. in most transactions, the landlord is different from the business seller who is selling the actual business because the business is running on a lease on that property. So that lease needs to get transferred out to the new buyer. So the landlord will get involved in the qualification of the

of the buyer, whether they get along well or not as a tenant landlord relationship. So that’s the second stage. Then finally, when both stages are over, we’re in the third stage, which would include any licenses that are related to the operation of the business, those need to be applied for. So the entire transaction takes anywhere between four to six months from start to finish once you have a buyer in contract. So those are timelines and managing all of that.

Working with SBA lenders who have tons of questions in between the transaction ⁓ is what I’m known for. I make sure I hand hold pretty much everybody in the game, The buyers, the sellers, the landlord, as well as the SBA lender, To make sure that deal crosses the finish line. ⁓ Yeah.

Michelle Kesil (13:27)
Yeah, absolutely. And are most of your clients purchasing land? said they’re developers, so are they developing ⁓ new builds or what does the flow kind of look like in terms of deals?

Ravi Jagtiani (13:43)
Yeah, on the development side is mainly, you know, a lot of people are, I mean, if you ask most developers today, they are looking for garden style townhome or single family home development projects. However, the land that is available and what the cities want you to develop on that is more on the opposite side. They want high density projects, more condominiums and more apartment buildings.

⁓ Unfortunately, due to the construction cost and lack of financing available for those types of projects, the development market is slow right now, especially for high density. ⁓ And then within the greater Bay Area, there’s very limited inventory available for single family or town home development left. So basically pretty much most of the buyers are looking for single family, but most of the land that is out there is

more suitable for high density development.

Michelle Kesil (14:40)
Yeah, that makes sense. And so what are you most focused on solving or scaling to next?

Ravi Jagtiani (15:29)
Well, would, I mean, I’m trying to obviously ⁓ add a lot of technology to my business. I’m trying to grow my business in different parts of California because I’m, even though I’m selling, you know, especially businesses and schools from San Francisco to San Diego, there are oftentimes where there are a lot of smaller, smaller cities in California where I get calls from, from potential buyers looking for schools to expand into those cities.

And ⁓ California, the size and breadth of it, obviously you cannot capture every little city out there. So I’m trying to expand as much as I can, ⁓ growing my network of brokers and partnering with them so that I have enough boots on the ground to take care of those transactions. ⁓ At the same time, I’m also trying to expand onto different businesses. ⁓ I’ve got involved in selling

multiple industries from e-commerce to adult daycare centers to lot of restaurants to banquet halls to hotels and motels, etc. I’m trying to expand onto other types of businesses like manufacturing businesses, small industrial businesses, ⁓ butcher shops type of businesses. So those often are in demand.

laundromats, for example, I’ve sold a couple of them, but they’re hard to find. So I’m trying to even find those, you know, to increase my inventory on those as well.

Michelle Kesil (17:04)
Yeah, amazing. And what kind of opportunities are you seeing in the market right now?

Ravi Jagtiani (17:14)
Well, honestly, the market is right now full of opportunities, especially on the business brokerage side, because unfortunately people are losing jobs due to AI and they are now trying to transition themselves from the nine to five corporate job onto, you know, small business ownership. So on an average, I get at least a call or at least one or two calls per day from people who have been

traditionally in the tech business or the biotech business, what you mostly see in the Bay Area, and even other businesses as a matter of fact. And they have either lost their job or are in the fear of losing jobs, therefore they want to increase their, ⁓ add to their household income by definitely getting into a small business acquisition.

It’s easier for them to acquire a ready to go business which is already generating cash flow versus reinventing the wheels and starting from scratch, right? So that’s where opportunities are for business brokers like myself because there’s a lot of demand being created because of the loss of jobs on the other side.

Michelle Kesil (18:25)
Yeah, absolutely. And what are some of the goals that you have for where you want your business to continue expanding into?

Ravi Jagtiani (18:38)
Well, I have goals in the sense that I want to basically create a niche in multiple verticals. The way ⁓ I was able to create a niche in childcare space selling almost 80 to 90 percent of the preschools. While I do sell a lot of other businesses as well, but I would like to shortlist at least four or five other vertical other industries that I want to start creating a niche and, you know, having

want at least one of my team members in charge of one vertical, right? I’m growing my team and I’m trying to get them, you know, fully, ⁓ knowledgeable about specific verticals. Like for example, restaurants, how to underwrite restaurants, how to value restaurants, right? you know, other, other, any type of business, right? How do, how do you value them? How do you underwrite them and therefore create a niche, make sure that we have

listings from multiple different business types versus only a few.

Michelle Kesil (19:39)
Yeah, absolutely. And when you’re working on commercial real estate, is that mainly to the end user or who is like the audience that you’re partnering with?

Ravi Jagtiani (19:54)
So it’s, I mean, commercial real estate is very broad, right? So if I’m selling an investment property, which is like a triple net shopping center or a multi-unit shopping center, or even a multifamily as a matter of fact, or a single tenant property, those are more towards investors, not end users. If I’m selling a business like a preschool, childcare restaurant, those are more towards end users who are looking to buy the business, acquire the business and run it themselves.

If I’m talking about land and obviously they are towards developers who in turn are planning to develop it into condos or single family or whatever it is and then sell it to end users, right? So I’m dealing with a whole different group of buyers.

Michelle Kesil (20:38)
Yeah, and how do you connect and meet all of these different people?

Ravi Jagtiani (20:44)
Most of my business is referral network, right? I mean, know people, they know me since I’ve been doing business for a very long time. I’m a successful broker. I’m the top 1 % realtor in the US. I am the number one business broker in California. And then I’ve got many awards, as you can see behind all my certificates. I’m also the number one.

commercial agent in San Mateo County. it’s pretty much referral. Referrals is what I get my business from. do, I mean, in my initial early days in business, I used to socialize a lot. used to go for different networking events and meetups, et cetera. I’ve slowed down on those because I really don’t get the time to do that anymore. But, you know, I do it once in a while. I do use social media to my advantage a lot. You know, I have…

LinkedIn and Facebook and Instagram and all these types of, ⁓ you know, channels to market my listings as well as market myself. That helps you to grow the business.

Michelle Kesil (21:48)
Yeah, definitely. Thank you for sharing. Well, before we wrap up here, if someone wants to reach out, connect, learn more, where can people find you?

Ravi Jagtiani (21:58)
Well, they can find me. You know, they can give me a call on 669-226-7416. Again, 669-226-7416. My email is ravi which is J-A-G-T for Tom, I-A-N-I group.com. My website is also same jagtianigroup.com

⁓ You can even find me on Facebook, social media, Instagram, ⁓ etc. You can also find me on various commercial real estate websites. You can go to CREC-C, just type my name, Ravi Jagtiani you’ll see 80 plus listings against my name. ⁓ Right? So I’m not that difficult to find.

Michelle Kesil (22:45)
Okay, perfect. Well, appreciate your time and your story. Thank you for being here.

Ravi Jagtiani (22:50)
Thank you, take care, bye bye.

Michelle Kesil (22:51)
Yes, of course. And for those listening to the show, if you got value, make sure you’ve subscribed. We have more conversations with operators like Ravi who are building real businesses. We’ll see you on the next episode.