Hi good to see you. There has been talk for a few years now about a tsunami of
business sales coming and that tsunami is on the horizon and is heading our way.
That's what the experts tell us, so let's have a look at what do they mean?
What is this business sales tsunami they talk about?
NZ was just 3 years away from the biggest small business sell-off in the country's
history, as the first wave of baby boomers prepared to cash in their
decades of hard work for well-earned retirement. In September 2008 when the
global financial crisis hit all those well laid plans for life after work had
to be put on hold, as business owners felt the impact of business profits
suffering, and the value of their businesses retreating. Many baby boomers
simply put their retirement on hold. But 9 to 10 years later now, and with the
economy recovering many are still behind the counter and in their offices.
Born between 1946 and 1964 or those aged between 50 and 70 approximately,
this segment controls over 80 percent of the spend in New Zealand and owns more than
half the country's businesses, and they're about to retire.
So in the last two years the number of those aged 65 and over has increased by 43,000 with
the weighing heavily towards the older end of the scale, and within this
demographic 50,000 businesses are expected to change hands every year over
the next decade. Now that has an estimated value of around three trillion
dollars. So these figures point to a generational change in New Zealand's
business ownership and future. The outcome is that by 2020 a significant
number of baby boomers will have, or will be in the process of, transferring the
ownership of their businesses, and it's estimated that 80 percent of baby
boomers here in New Zealand will not have completed any form of succession plan.
There was always going to be a glut in the market when the baby boomers
tried to sell their business, and with the financial crisis
compressing that into an even smaller time frame, it's being labeled tsunami.
So where traditionally there's been a shortages of businesses for sale and an
oversight supply of buyers, this transition to a buyers market makes
timing all more important for sellers. Will we get pre-crisis prices again? Hard
to know, but we were witnessing businesses getting multiples four, five
and six times profit, and now we're getting two three and four times profit.
The baby boomer generation is going to run out of time to effectively hand over
their businesses to the younger generations, or to get the best sale price for their business.
Fundamentally sellers need to prepare a
succession plan. They need to create options for producing a win-win outcome.
And with the bulk of baby boomers nearing their seventies, business owners
should not wait until the last second to put their business on the market.
They need to avoid that tidal wave, that tsunami of sellers. A succession plan
could take three to five years to put in place and it's typical that New Zealand
business people don't invite experts into their business until the very last
minute. It's the old she'll be right, number 8 wire effect for business owners
in this country. Succession is really about creating options getting a fair
price at sale time is the outcome of good processes, and it's not an event for
a business that in many cases is the culmination of a life's work.
Acting before getting lost is the best advice to those nearing retirement. Investing
time consulting with the participants in your succession plan, such as a business
broker, a lawyer an accountant, that will assist you greatly in realizing and
generating a plan to leverage a sustainable exit from your business.
Do you think there'll be a tsunami of business sales coming? Or are business
owners, are they passing their businesses on to their wives, their sons, their
daughters perhaps family, extended family members, or the staff in the business.
Let me know what you think. Do you think there's going to be a tsunami
of business sales? Hey thanks for watching appreciate it let me know in
the comments below if you agree or disagree with me. If you'd like to
know more about selling businesses or buying businesses you might want to
consider subscribing to my channel. Nice to see you, see you again next time