The market is hungry for activity
The COVID-19 pandemic immensely affected businesses in nearly every industry. If you were considering selling your business before the pandemic, it is likely those plans had to be put on hold or were disrupted. However, now that the world has begun to open again, the market is booming and there is a strong demand for profitable companies that could withstand the effects of the pandemic.
As many business deals had to be put on hold during the lockdowns as buyers were anxious about how Covid-19 would affect business results, the world of M&A was forced into a state of suspension. The pandemic also created unmatched economic insecurity that kept many would-be sellers from closing deals.
However, as vaccination rates rise and the lockdowns were slowly eased, sellers and buyers alike are becoming far more confident about the business environment causing deal volume to increase. Buyers are having to play catch up on at least 12 months’ worth of business deals, putting sellers at an advantage as the demand to buy is elevated and only increasing.
Another opportunity for sellers that has come from the suspension of business deals is the increased amount of corporate and investor capital looking for appealing assets. PE and strategic buyers have been able to accrue massive cash reserves during this market pause and are now urgently seeking growth.
Business that are particularly sort after at the moment include transportation, healthcare, behavioural health & counselling, manufacturing, distribution, technology, and food establishments that offer take out/delivery.
Keeping your business involves risk
It is often challenging to know if your business is considered high-risk in a fluctuating market. As well as this, there are many other challenges involved in owning your own company, especially in a post-pandemic business environment. Noting these challenges will assist you in determining if selling your business is the right move for you. If the risks outweigh the benefits, it may be the right time to sell and develop your exit strategy.
Sales prices are taking off in many industries
Sales prices are currently extremely high due to a huge amount of interest being shown in most industries.
As an overview, prices have been shown to be 20-30% higher than expected recently. For example, if a business is usually valued at 2 times EBITDA, it is likely to
currently be valued at 3 times. This can make a huge difference for someone looking for a large sale. There are, however, many elements that effect the valuation of each business. Nonetheless, the overall observation is that values are currently largely up against the long-time average.
The team at ABBA Group have represented corporates and individuals in over $500 million worth of acquisitions, divestments, and mergers since 2016. Our track record has been consistent through all economic conditions and transcends all industry sectors.
The good times will not last forever
Whilst buyers are currently flocking to specific industries, it is important to note that they can turn and run even quicker. This means that NOW is the best time to sell.
It has been proven time and time again that although an industry may be going through a boom, it can just as quickly fall. There have been countless examples of business owners considering selling during a successful time in the market but were not able to get a sale. These business owners have then had to pick up the pieces and attempt to restore their company to what it was before the industry crash.
So, if you are considering a possible exit remember that it is always better to sell whilst things are going well, and maybe now is the time to explore your options.
Are you ready to get started preparing your business for sale? Register as a Seller today, or contact ABBA Group on 1300 064 944 or info@abbagroup.com.au to have a confidential discussion with your local business broker at no-cost.
