Business owners looking to sell up in the coming years may be in for a shock, with an exit specialist warning the volume of businesses listed for sale is set to soar.
Speaking on the release of American Express research as part of its Shop Small campaign, which suggested that one in four business owners is looking to exit within the next three years, The Exit Strategy Group’s Kerry Boulton agreed that “there will be” a glut of businesses for sale in future years.
Indeed, the American Express research found that 36 per cent of the owners polled are looking to sell up to someone outside of the business, the highest of any potential exit strategy.
Only 29 per cent said they intend to keep it in the family and pass the business onto their children.
“We know we have an ageing business owner population — it’s simple demographics, baby boomers. They’re starting to think about it now,” Ms Boulton told My Business.
“2028 is the peak when the most number of people in Australia turn 65. So, it’s not surprising that there are now some people turning their thinking towards retirement.”
According to Ms Boulton, such a situation is not really evident yet, but that it is likely to eventuate, and may impact some industries more heavily than others.
That will make it increasingly important to have the business sale-ready in order to stand out from the crowd and attract buyers willing to pay a strong price.
Buying a business like buying a home
Ms Boulton said that, when it comes to selling a business, following a similar process to selling a property can be a useful way of attracting buyers.
“I often use selling a home as an analogy, because most people can relate to that,” she explained.
“So, if your business is well run, if you can put yourself in the shoes of a potential acquirer and say, ‘Well, if I wanted to buy this business, what would I need to know? And what’s the information I should have at my fingertips? How can I best present this business to the market?’
“If you can think that way, then you’ve got a really good chance of actually being able to find a business.”
Don’t overlook your target market
Just like a business will target a particular demographic or type of customer to buy their products and services, so too should an owner looking to sell their business consider what the target market is.
“Think about who could buy your business... a lot of people just say, ‘Oh, I’m just going to sell my business’, and they go off to a broker,” Ms Boulton said.
“And it goes online or whatever and that’s as good as it gets.
“But if you think about it from a different perspective, as to who possibly could buy your business: there could be someone who is a customer, could be somebody who is a supplier. So, think a little bit more strategically and make your business attractive to that potential acquirer.”
She added: “There’s some really proven methods of going about it so that you give yourself the best opportunity, but yes, there will definitely be a glut [of businesses for sale].”
A similar warning about business sales was issued back in 2016 by Tony Kabrovski of business advisory firm HLB Mann Judd.
“There’s going to be a lot of businesses for sale out there,” he predicted, again citing an ageing population and baby boomer owners looking to retire.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
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