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\nBigger investors are looking for businesses that would be managed by someone else and return an annual profit of a least a million dollars.
\nPhoto: RNZ\/Calvin Samuel\n<\/p>\n
Demand for businesses to buy remains high, with ABC Business Sales seeing a 28 percent increase in sales over the past year to a record of more than 500 deals done.<\/p>\n
“While fewer businesses came up for sale, [there is] a clear sign that demand is now outstripping supply,” ABC managing director Chris Small said, adding that more than 27,800 potential buyers expressed interest in businesses advertised for sale over the past year.<\/p>\n
He said there were currently 39 confidentiality agreements signed per sale listing, compared to 15 per sale listing three years ago.<\/p>\n
“Right now, good businesses that are well prepared are getting strong interest, because there are more buyers than sellers.”<\/p>\n
He said some would-be sellers were holding back, concerned about selling into current market conditions, but that was not always a good strategy.<\/p>\n
“Interest rates move, banks tighten lending or buyer confidence drops, and the value they were hoping to achieve isn’t there anymore.”<\/p>\n
Small said one of the biggest lessons from 40 years in the industry and more than 10,000 sales was that selling a business was rarely just a financial decision – three factors needed to align to achieve a good sale.<\/p>\n
“It’s got to work for you personally,” he said. “You want your financials to be at their strongest and you want the market to be at their strongest.<\/p>\n
“Conversely to that, if you haven’t had a great year of trading, ultimately, you would be better off waiting, building your profit up and then coming to market, when you’ve got those numbers in a stronger position.”<\/p>\n
He said more buyers were looking to buy themselves a job, with a business that could return an annual income of between $200,000-300,000 for one working owner.<\/p>\n
“The trend certainly is more people looking… to be in charge of their own destiny and creating their own wealth by being their own boss,” Small said.<\/p>\n
“I think it’s just become a bit of a more of a trend over the last 2-3 years.”<\/p>\n
He said bigger investors were looking for a business that would be managed by someone else and return an annual profit of a least a million dollars.<\/p>\n