Is It Worth The Gamble?
Kenny Rogers’ lyrics from his well-known Gambler tune “You’ve gotta know when to hold ‘em, know when to fold ‘em, know when to walk away and know when to run” is an outstanding correlation to deciding on the most appropriate time to sell your business.
Our market can fluctuate rapidly and like many industries, business sales are cyclical, and driven by way of the supply and demand of buyers and the businesses on the market.
Australia is still enjoying large buyer enquiry, despite the turbulence that Covid-19 has bought to our economy. This is as a result of a combination of the record low interest rates, job uncertainty, the current high returns on investment and buyers yearning to be their own boss.
Having the knowledge that there are ample customers is fantastic for us as Business Brokers although, the challenge we now face is we only have approximately 25% of our normal inventory holdings.
This could insinuate that business owners are holding on, perhaps because they are worried that they may not be able to achieve a good price/terms if they try to sell now. For many commercial enterprise proprietors this could not be further from the truth whilst, at the same time there so many buyers are sitting on the sidelines, waiting to invest.
Recently, we saw how the Australian Government painted a very sobering picture of deficits that are anticipated to get worse. The outlook forecasts the unemployment price will top at 9.25 per cent by using December and the budget deficit will reach a whopping $185 billion or 9.7 per cent of GDP. This incredible figure is the greatest deficit Australia has seen World War II.
With the Australian economy’s predicted contraction by 3.75% in 2020 and then subsequently rising by 2.5% in 2021, we will see a lot of business owners left with no other choice but to sell their businesses.
Considering the baby boomers own the biggest proportion of businesses operating in Australia at present and over the next 15 years 70% of them will need to retire, our cycle is about to turn. We are very confident that we will see a huge wave of businesses flood the market.
Ultimately, for many baby boomers, the risk associated with holding on to their business is clearly not worth the gamble.
If you are contemplating selling, now is the time to “know when to run”.
Please don’t hesitate to contact the Team at Savvy Business if you would like to talk about the above in further detail.