We Sold 15+ Businesses in FY 2022. Here is What We Found.

We Sold 15+ Businesses in FY 2022. Here is What We Found.

For over two years, the Australian economy has faced uncertainty and market volatility as a result of the COVID-19 Pandemic and the ensuing lockdowns. While market shifts, particularly those observed during the pandemic, can induce fear and worry among brokers and clients, a transition in focus and mentality is required to adapt to the "new age" of business brokering. 

Our determination to change gears in the face of shifting markets has been critical to our performance over the past year, leading to our success in selling over 15 businesses in the hospitality (40%), retail (20%) and distribution (20%) sectors.

Here, we offer some insights we've gained over the past year that could help you succeed in this dynamic, fast-paced industry – in the context of a highly unstable economy and environment:

Robust systems and processes are fail-safe guarantees
 

Know what your clients need

Instead of putting up as many listings as possible, we focused on investigating what our clients needed. Beginning in 2020, we concentrated on understanding Purchasers' reasons for acquiring, whether they are operators looking to expand, parents who have lost their corporate jobs or hospitality operators thriving thanks to government subsidies.

We anticipated what strategy to take when clients were ready to purchase or sell since we had already identified who required what. This has been beneficial, especially for private equity clients, who typically have extremely precise mandates. We were able to readily establish a common interest between Vendors and Purchasers that we are attempting to pair up due to our thorough grasp of the varying demands of our clients. This enabled us to simplify our role as sales facilitators, requiring relatively little effort to persuade Purchasers to make an offer.

Understand market trends and projections

It is no secret that the COVID-19 lockdowns have created significant hurdles for business owners, including workforce and supply chain issues. This is also the fundamental reason for the high ratio of Vendors to Purchasers during the last two years, as Purchasers sensibly fear the risks of running a business during this period. However, as business brokers, we believe that it is our responsibility to identify these challenges and understand how they may be mitigated as well as how the shifting market will influence or improve them in the long term.

As the economy gradually recovered in 2022, it is our responsibility to ensure that Purchasers recognise that these challenges are just temporary. In a way, they are acquiring a business at a discounted rate. The assured recovery of immigration is also certain to improve revenue over time, particularly for hospitality businesses that rely on tourism. Furthermore, while income for the previous two years has been predictably low for most businesses, Vendors ought to be aware that more Purchasers are now acquiring primarily on goodwill rather than financial records.

There’s no need for convincing when you’re being realistic

Most brokers today value businesses primarily on their Vendors’ pricing expectations and multiples, often missing the step of reviewing and considering updated market data. However, we were one of the few brokers in the market that priced adequately based on comparable business sales in the past.

The pandemic helped us forge strong ties 

Some of the Purchasers we've dealt with in the previous six months, in our experience, have already forgotten who we are. On the contrary, the Purchasers we communicated with during the pandemic lockdowns are still calling and displaying interest in dealing with us.

During the pandemic, one of our prospective Purchasers made an offer but had to relocate overseas. As a result, the transaction fell through. Only recently, he called us to say he's returned and wants us to find him a solid business to acquire. Despite speaking with ten different agents and being presented with ten various listings, he sought us first to engage our services – not because he wants to acquire now, but because he wants to buy with us.

Know your worth

We acknowledge that the manner we market our listings is rather unconventional and more expensive than that of other brokers. Nevertheless, both Vendors and Purchasers choose to spend a premium price to engage us for our services. Business brokering has become more technologically driven which we have adapted with flying colours while staying current with recent industry trends. We have the expertise and results to justify our premium price. We have established our cutting-edge marketing approach over the years, and we are certain that the market must adapt to what we do. 

If clients do not appreciate our way of doing things, we do not take them on. Simple as that. 

Recap

2022 was a bright year for business brokers, as both Purchasers and Vendors gained confidence as market conditions were more steady than the previous year, if not improving. To reiterate, the key to our success was our ability to determine who our Purchasers were, our commitment to having robust systems and processes, recognising our clients' needs and pairing them with only the most qualified businesses.

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