For most business owners I have met, their business is a part of them, a part of their identity. So, it's no surprise that decisions around exiting from such a huge part of their life is difficult.
I liken the decision to sell a business to the decision for a young couple to have their first child… there is never the perfect time! There is however not a lot of downside in preparing for the inevitable, which if done right will have a hugely positive effect on the outcome achieved from the exit.
Whatever exit you are looking at and whether you employ advisors to assist you or manage it internally, going through this process will identify areas of strength and areas requiring improvement. It will require you to face difficult questions and situations, it may even ask you to make sacrifices around your fairy-tale ending.
Whilst there is no perfect time to sell, the current market represents a great opportunity for business owners to maximise the return on their years of hard work.
- Baby boomers continue to defer selling their businesses and because of this, the number of quality businesses for sale are low
- The NZ economy has a significant amount of capital seeking investment in mid-market businesses. Around $700m was raised by NZ private equity firms in 2016. The majority is still looking for a home. This creates competition for assets pushing prices up.
- Low interest rate environment. Low interest rates on one hand mean net savers are looking for better returns on their cash than they can achieve in term deposits or similar investments, pushing more funds into the private business space. Low interest rates also mean businesses can carry more debt, reducing level of equity required to acquire an asset and hence improving return on equity making it more attractive to investors.
Achieving the best outcome when selling a business requires business skills, market knowledge, and networks. That’s where Rede can assist, if you want to learn more about the above or catch up for a coffee to discuss, please get in touch.
021 022 73670