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Market Overview
Throughout the 2009 and 2010 financial years, the business market was extremely quiet to say the least. Buyers were tentative to be in the market, sellers were unprepared to meet the slower market and banks were unwilling or unable to lend funds to buyers. All this meant that very few buyers and sellers came to terms.
Mid way through the 2011 financial year we are finding that listing enquiries have picked up, albeit buyer demand is still weak and buyers are still unable to obtain funds easily. We have also seen a spike in vendor finance proposals in recent months.
Trends
Prices of small businesses started to decline in early 2008. We have seen this trend continue until mid 2009 – since then, prices have remained reasonably flat. Earlier this year, we saw some early signs of prices improving, but all signs of improvement have now disappeared. Our main concerns are that Sellers are unwilling to list their business at the bottom end of the market, buyers are hesitant to pay for large amounts of goodwill and Banks are still stringent with their lending.
In our local region, we continually find that the owner operator businesses (ie no owners wages in the expenses) are increasingly harder to find buyers for. This is due to the fact that the region boasts high employment rates and salaries comparable to net profits of these smaller businesses. We are increasingly finding that the “Buy yourself a Job” market does not apply in the Mackay region. As a result, the sale values of lower profit businesses have been decreasing over the last five years.