In the midst of the COVID pandemic there was a definite stall in the business for sale industry. Sellers began to panic that they would not achieve an optimum price for their business and buyers were not willing to commit with so much uncertainty in the market. Everyone was confused on what the future would hold.
It’s been over 6 months since the start of the outbreak when the Government announced Jobkeeper to help support businesses and employees. Whilst most States have lifted many restrictions and with Victoria’s lockdowns easing this week, business owners have started to see how the pandemic is being managed.
So why the surge in buyer enquiries?
Firstly; Opportunity. Serious buyers know what they are looking for. If a business enters the market that meets their criteria and they can get it for a fair price, they are ready and willing to commit. Buyers have now seen the effects of the restrictions and how to diversify and cope with the transition.
Secondly; People are looking for job prospects. According to the ABS, unemployment rates edged up to 6.9% in September 2020 from 6.8% in August. The number of people unemployed increased by 11,300 to 937,400 people, as people looking for full-time work went up by 8,900 to 703,200 and those looking for only part-time work rose by 2,300 to 234,200.
That’s nearly 1 million Australians who are unemployed. With industries such as Tourism being hit hard by the COVID restrictions it provides an opportunity for people to transfer their skills and become a business owner. The notion of ‘buying yourself a job’ is more prominent now than ever before.
Thirdly; Diversification. Many business owners have learnt how important it is to have multiple income streams to mitigate risk. Some industries have been hit a lot harder than others. Whether it’s increasing product offerings or purchasing another business to increase revenue streams. A good example is a major fashion retailer who operates 6 different brands, saw a massive increase in active wear and a massive drop in formal and event wear. It was the diversification in brands and products that protected this major retailer during COVID.
With more buyers entering the market, is it a good time to sell?
We hear from brokers that a lot of business owners are hesitant to list their business for sale at the moment as they feel they won’t get a good price and are also still receiving JobKeeper so feel they can wait until March 2021 to consider their options. The problem with this is, it takes on average 6-9 months to sell a business in Australia. So if you wait until March you will be joining hundreds of other businesses entering the market vs being prepared and on the market to be part of that transition. Listing now means there is about 5 months of Jobkeeper left and you can continue to receive during the sale process if eligible.
The good news is, buyers are making fair market offers. The fear of low offers isn’t quite the reality. There are always buyers who try to “get a bargain” with unrealistic low offers. That’s why many business owners engage a business broker so they can negotiate on your behalf.
Business brokers, accountants and owners realise the effect COVID has had on the entire business industry. Valuations are adjusted accordingly to account for this.. The value of a business is extended beyond just 6 months. How you pivoted and adapted during this time may influence a buyer to choose your business, but valuations are being generated with adjustments. Selling now doesn’t mean you will sell for a low price, it means you are visible for buyers and there are buyers looking.
If you are in the market for a business, be sure to sign up for the Bsale Buyer Notification, so you can see when a new business is listed. If you are selling, there are options available. Always seek professional advice when buying or selling a business.
ABOUT THE AUTHOR
Vanessa is the CEO of Bsale Australia. She has been the managing director for the past 9 years. With extensive knowledge in online marketing and the business for sale industry. Vanessa is a huge supporter and advocate for small business in Australia.