You may not think it, but now is a great time to sell a business.
While some are putting the brakes on their business activity, there is a large number of active, engaged buyers looking for a business to invest in, and if you thoroughly prepare your business for sale, you’re guaranteed a good outcome.
Wayne Ronald, Business Broker at ABC Business Sales, answers some of our FAQs to find out more.
Why is now a good time to sell your business?
With inflation up, cashed up buyers are looking to invest in something more tangible, and generally businesses give a better return on investment. With the housing market cooling, growth slowing and the Bright-line test, businesses are proving to be the better investment.
There is a misconception amongst business owners that now, given the current climate, and the difficulties Covid has presented, that there are no buyers in the market. While this has some truth to it, the fact is that the buyers are still there. What’s proving to be a little more complicated is bank financing, however, we can say with certainty that if your business is correctly priced, marketed and represented – it will sell.
We are seeing a high number of inquiries coming from Auckland, and with Tauranga’s limited job market, many are looking for a business to purchase.
What would you say to someone who is unsure about selling due to the impacts of Covid?
There is never an ideal time to sell your business and there will always be doubt or hesitancy. What is important to understand is what your business is worth, especially if it’s been heavily affected by Covid restrictions. Once an appraisal is done you will have a better understanding of what the market is likely to pay for your business. This will make the decision of whether to sell or not, a lot easier.
We offer confidential, no-obligation appraisals along with some good insight into what the market is doing, and what its prepared to pay. If you are thinking of selling, but unsure of where to start, getting a professional appraisal done and having an industry specific agent talk you through the process will help make that decision.
What are some of the advantages of selling your business?
Depending on where you are in your business and life cycle, selling your business may have different meanings or outcomes.
For me, one of the greatest advantages of selling your business is that the total sale price is not taxed, meaning you are left with a better cash injection than, say, working for a few more years while being taxed and trying to get the same return. This lump sum can be put towards your retirement fund or used to start your next venture.
It all comes down to your motivation and your reasons to sell.
What are some of the things buyers are looking for in a business?
Given the market we find ourselves in, and this is true to any market, Covid or not, buyers and their advisers are looking for businesses that present well. By this, I mean their accounts are up to date and presented professionally with clear understanding of any discretional spending. You will be surprised at how many business owners don’t understand how their expenses are recorded and rely solely on their accountants work and advice.
Nothing speaks louder to a prospective buyer than an organised business vendor who has clear trading history that is up to date, with a good understanding of their own accounts. Being prepared and having documents at the ready creates trust… simple, yet possibly the most important asset of a successful transaction.
What types of businesses for sale are trending at the moment? Any particular sectors / sizes etc?
At ABC Business Sales, each broker is specialised and industry specific. We do this to offer both seller and buyer a better experience with direct industry knowledge.
Each sector will have businesses that are selling and those that are not. What sets them apart is the size of the market for each sector – so yes, it may seem that a certain sector is preforming better than others, however it’s really down to supply and demand and the 3 Ps: Price, Presentation and Promotion.
Each sector has buyers with different budgets, so if the business is priced, presented and promoted correctly it will sell. Hospitality has been temperamental, with probably the most disruptions due to Covid. However, that said, in recent weeks, after the easing of restrictions, enquiries are booming again.
The market is looking brighter, and the general public mood is improving. Borders will soon be open.
If you are thinking of selling your business, get in touch with an ABC business broker for a confidential chat. Let’s work together to get your business prepared and maximise your return. We’re here to help you achieve the best outcome.