As my ex-Lecturer Tom McKaskill notes in his column for Smart Company…
It is widely acknowledged that a significant portion of private firms will be coming onto the market over the next 10 years as the baby boomer generation nears retirement.
While some have family members to pass the business onto and others will reach an arrangement with employees to buy out their interests, most will be seeking to sell their businesses. With this background, it is hard to understand why so many fail to confront the issue and fail to undertake business and personal planning to provide the best outcome from such an event.
Some founders simply don’t want to let go of their baby. They have often put the best years of their life into building a robust business and the thought that someone else will take control is impossible for them to accept. While they know that a sale is inevitable, they are simply unwilling to spend any time planning for it because it means they are acknowledging they will be selling their business….
Sound familiar? continue reading…
Today’s business sales market for small to medium size businesses can best be described in one word – “patchy”. Not all businesses are in demand and buyers are very selective!
Based on current buyer inquiries the following are industries attracting
the most interest:
Accounting, IT services, aged care/personal care
Profitable businesses operating under management
Wholesale, niche manufacturing, online businesses
Generally, businesses with a profit BOS* of $100,000 – $150,000
(* Before Owner’s Salary)
General retail, health and beauty, home and trade services
Generally, businesses with a profit BOS*of less than $80,000
A positive development is the increasing buyer interest from cashed up professional investors and corporate entities seeking quality businesses delivering a sustainable profit.
This greater level of activity has yet to translate into improved transaction multiples and higher sale prices. However, it should improve overall market confidence if sustained throughout the rest of the year.
In this “patchy” market, advise business owners to start planning ahead if they are contemplating the sale of their business. Putting in the effort to prepare and market the business for sale will increase the chances of locating the ideal buyer; allowing for the owners to exit the business on their terms.