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Will you miss out when the big business sell-off begins?

In the past business most owners were pretty sure that when it came time for them to sell up they would get a decent price. That usually meant some multiple of the profit figure and that meant they had a decent nest egg for their retirement.

But times have changed.

Firstly, today’s younger generation are not as interested in buying a business or taking over a business as previous generations were. There are simply not enough buyers out there for the number of businesses that are for sale. And that ratio is only going to get worse.

As the baby-boomer generation come up to retirement in the next 10 years there will suddenly be way more businesses for sale than there will be younger people willing to buy them. So that means only the very best businesses will sell.

Secondly, purchase prices that had big multiples of profit are a thing of the past. A lot of businesses sell these days for the value of their assets only. There is very little goodwill paid anymore. A top multiple in this market is 3 x EBIT if you are lucky. Very lucky.

What all this means is this:

If you are a business owner looking to sell up in the next 3 -10 years you might not get anywhere near the nest egg you are counting on.

To get a good price your business will need to have things like, but not limited to:

  • Unique intellectual property

  • Valuable long term customer contracts

  • SOPs that mean a business can run without the new owner being too hands-on

  • A successful strategy for growth already in place

  • Motivated and loyal staff who will stay on after the sale.

If you are not like this now, or you are not working your way toward this, then you are not sale ready and you may never be. Your business could well be left on the shelf as other brighter opportunities are snapped up by a limited buyer pool.

Be warned, getting your business ready for sale might take two years. But the effort is well worth it in sale price terms. Or it could be the difference between selling and not selling at all.

At The Hawke’s Bay Profit Club, we help business owners get their businesses ‘sale ready’.

Contact us here to find out more.

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I'm Roger

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