Business Sales – Post Covid

Business Sales – Post Covid

Covid-19 has and will continue to influence people’s lives and communities, as well as impact on businesses and the global economy.

Worldwide, employees and business owners have adjusted well to social distancing by working remotely, utilising clever technology to retain staff and continue offering their services and generate business.

Surprisingly, at this stage we are yet to notice any major changes to business sales. Many business owners who had been contemplating retirement or exit strategies (pre Covid), are now more motivated to sell, however, this is also quite typical at the beginning of a new financial year.

Recent numbers of buyer enquiries have well exceeded normal levels. What really makes this statistic standout is, during May/June/July we have been running with much lower stock levels than we would normally enjoy. It is for this reason that we suggest the Covid-19’s impact on business sales has been minimal and the usual scenario of an abundance of buyers and limited attractive business opportunities continues.

Some of the winners to come out of the pandemic are supermarkets, residential service providers, online businesses, hardware and home/garden outlets and health and lifestyle retailers such as bike shops.

The building and building supply industries have continued to trade well in recent months due to advance contracts. They may slow soon though, as new home sales figures have been down considerably in the June quarter.

Unfortunately, there are also industries that have been heavily impacted from this pandemic. The health industry, hospitality/tourism, exporters, retail/fashion, food/beverage, and those service businesses who were unable to trade. Fortunately, it is anticipated many of these will bounce back quickly as the borders re-open and we slowly return to normality.

Moving forward, it is also anticipated many wholesalers and big box retailers will be restricted with stock supply, as China and major manufacturing centers play catch up with worldwide orders and logistics delays.

Whilst buyer demand remains strong for solid businesses, the elephant in the room continues to be buyers achieving finance approval. The big four banks appear to have lost their appetite to finance a large portion of business acquisitions and only well-heeled buyers looking at blue chip opportunities are getting a look in. Due to this, cash buyers should be in a strong position to negotiate favorably.

We would encourage long term business owners who are contemplating selling to contact us, as there will be a shortage of solid, resilient, and profitable businesses for sale across all regions. With high demand for quality businesses and a shortage of stock, now is actually a great time to list and sell your business with Queensland Business Sales.

Many business owners will also look to exit once the Job Keeper allowance ceases in September. In our opinion we will see the tides turn and in time the current sellers’ market will turn into a buyers’ market as more business opportunities become available.

The Covid-19 has highlighted the Sunshine Coast and South East QLD as a safe haven and due to this we expect many more southerners will make the sea change and head north to capitalise on the numerous benefits of living in our progressive, sub-tropical climate.

Most business opportunities on the market are offering solid returns, especially when compared to other investments. Many businesses achieve more than 40% return on investment (ROI). The residential and commercial markets typically only offer 4% - 8% ROI. The banks are offering less than 3% on term deposits and many see the stock market as simply too volatile. So, it is no surprise that astute buyers are bullish on quality businesses.

One thing for certain is we are witnessing one of the biggest events we will see in our lifetimes and with the Covid-19, change is unavoidable. We are a long way from knowing what the outcome will be, however, at this stage our world in business sales has changed little and thank God we live in such a beautiful, safe, low risk part of the world.

In the interim, if you or anyone you know is contemplating selling a business, it may be a long time before you see more favorable conditions to sell. There is nothing to fear, we have an abundance of buyers and very few opportunities, so give us a call today to discuss a strategy.

We all know the saying – “TIMING IS EVERYTHING!!”

Stay safe and I look forward to the next installment of Business Sales – Post Covid-19.

Rod Russell
0409 931 600
Principal, Savvy Business Sales and Queensland Business Sales.