Baby Boomers expected to struggle in buyer’s market​

Over 270,000 mid-market business are expected on the market in the next five years, as the Baby Boomer and Builder generations prepare their businesses for sale.  However, with a limited pool of buyers, competition is expected to be fierce.

These are the results of our latest Exit Smart Survey which looks at the exit plans of middle-market business owners.

The Move to Market

Three quarters of business owners surveyed intend to sell their business over the next ten years, with 65% of these expecting to exit in the next five years.

Applying these statistics to the current number of mid-market businesses across Australia (those with between 3 and 200 employees), we could expect to see approximately 270,000 businesses on the market by 2020.

And expectations are high, a third of business owners are seeking a sale price above their business’ current market value.

A limited pool of buyers

With a rush of businesses on the market, vendors are expected to outweigh purchasers.

Demographics play a major role.  A trade sale is the most popular exit option with a majority of survey respondents believing their business will be bought by a competitor.  However, with 77% of business owners aged 51 and above, there’s a likelihood that these competitors are also seeking an exit.

This begs the question; where are the Generation X and Y entrepreneurs? In the current financing environment; banks and other lenders require substantial collateral to secure a loan.  This is a luxury that many in the younger generations do not have.

The end result is expected to be downward pressure on price; unwelcome news for our business owners who have worked in their business since inception

Get Exit Smart

In our experience, most business owners only seek advice when they are actually ready to sell. While it’s possible to prepare the business for sale quickly, it can often lead to a band-aid approach to issues rather than a structured process that truly adds value.

If you’re looking to exit in the next five years, it’s critical that you plan early and obtain comprehensive advice.  In doing so you’ll be better able to position the business to attract buyers and gain maximum value.

 

Request your copy of the Exit Smart Report from research@williambuck.com