Business Broking in the Wake of Coronavirus
If buying a business is the ultimate pipe dream, who exactly is today’s buyer in the current climate?
It’s no secret that Australia’s business world has taken a hit in 2020. Bushfires, floods, weakened consumer confidence and a global pandemic have provided challenging circumstances for business owners to operate and stay afloat, to say the least. However, where there is challenge, there is also opportunity – and many business buyers are keen to take advantage of that. So, in the midst of all this uncertainty, who is buying a business in 2020?
Dustin Slypen, REIQ 2020 Business Broker of the Year says today’s buyers are keen to purchase a relatively low-risk business that offers a secure income. “The ‘buy a job’ market is booming,” he shares. “In May our [Link Business Brokers Brisbane] enquiry rates were at a three year high. The majority of those enquiries are from new buyers entering the market with searches for businesses between $200,000 – $500,000, with the view to either operate it themselves or invest in an established business with great trading history.”
As many of us have been familiar with during COVID-19, businesses have had to pivot both quickly and seamlessly to adapt to challenging conditions. Restaurants were quick to offer takeaway option. Call centres adopted technology that allowed staff to work safely from home. Educators had the arduous but necessary task of teaching remotely. Today’s buyers are acutely aware of such challenges and are not shying away from industries that may have been deeply impacted by COVID-19.
“There’s a selection of opportunistic buyers that have identified some opportunities due to the COVID-19 crisis,” adds Slypen. “These type of buyers are usually sophisticated, experienced business owners looking to expand and see the many advantages of buying in the current market. I specialise in the fitness industry and I thought this was going to have a damaging effect but in recent weeks, I’ve just been smashed with offers and contracts. For most people, they’re understanding that it’s a once in a lifetime event and know that the end is near.”
For those wanting to sell, the market is hot. With plenty of active buyers our and about, coupled with the various Government packages offered to small businesses to stay afloat, Slypen says many should be in a healthy enough position to attract a very fair and reasonable sale price. “No one can predict the future – as per recent events will prove and therefore now is as good a time to sell as ever,” he adds. “I’ve got a number of scenarios from last year where sellers didn’t agree with the appraisal of their business, thinking it was worth more. So, they held off selling and now they’re wishing they listened to our advice and sold.”
For business brokers, the onus to match the right buyer with the right business has never been more important. With more stringent lending conditions, many business owners are having to offer some lender finance – essentially, the business owner is bankrolling the buyer for proportion of the price. For brokers, it’s crucial to match a buyer with a business by assessing their skills, personality and motives.
“The seller wants the right buyer to come in, understand the industry and be the right fit for their business to make sure they’re actually going to get paid long term,” explains Slypen. “We’re also finding there’s a lot of franchises out there being sold, and franchisors really want the right buyer or the right franchisee entering their brand as opposed to before where they just wanted the money. Nowadays, you really need to have the right personality and skillset for the industry you’re entering into.”
Business broking in 2020 presents its own set of unique challenges. To combat this, the REIQ have developed a comprehensive webinar with useful information to help grow your skills on how to market your business and generate leads, as well as in-depth look at how business values will be affected post COVID-19. Book your tickets here.