ABC Business Sales has recently released its eighth Market Intelligence Report, providing insights and data on the current trends in the business sales market across New Zealand.
According to the report, completed business sales have remained elevated throughout 2022.
This made it the second-highest year in ABC’s survey, only behind the record volume experienced in 2021.
The data shows the average business price has been increasing at 10 per cent annually, driven by higher volumes of businesses being sold in the $2-$5 million range.
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Like the housing market, we now have a higher percentage of businesses selling for more than $2 million.
ABC predicts some key themes and trends for 2023, based on the data up to December 2022 and the company’s insights into the market.
It expects business prices to remain flat in the first half of the year but accelerate towards the end of the year as immigration ramps up and with election stimulus from whichever party wins.
Additionally, the supply of new businesses coming to market should remain at higher levels as experienced in 2022 and 2021, with retiring business owners continuing to be the key contributors.
As the graph shows, completed business sales volumes for the 12 months to December 2022 are down 9 per cent compared to December 2021 and 14 per cent ahead of December 2020.
The data supports the conclusion that 2021 was a record year and 2022 reverted back to a more normalised market at sustainable volumes.
Overall, the average price for SME businesses (up to $5 million) excluding hospitality has increased by 12 per cent for the 12 months to December 2022.
For the past three years, ABC has had a substantial increase in volumes of businesses coming to market with values less than $2 million, increasing the average business price and resulting in a 28 per cent increase from December 2020-22.
The average price for hospitality businesses of less than $5 million has seen a 9 per cent decrease for the 12 months to December 2022 and a 34 per cent increase compared to December 2020.
The rationale for prices increasing during what has been an unprecedented time for hospitality businesses has been the “flight to quality”.
Purchasers have had less motivation to buy smaller/start-up hospitality businesses and have had a preference to spend more on existing/proven hospitality businesses to reduce their risk in what have been uncertain times for the industry.
“The key takeaway for business owners thinking of exiting their business in the next 12 months is there will be more businesses coming to market and fewer buyers over the short term.
“Optimising a sale process will require more skill and expertise than ever before,” says ABC managing director Chris Small.
Contact: Chris Small, ph 0800 180 222, email [email protected]
— Article supplied by ABC
