The average business price has increased from $703,701 to $810,255 (15%) in the last twelve months. It has been well documented that 2021 was a record year for M&A activity in New Zealand and SME business sales were a material contributor to this record year of activity. The key reasons for elevated business sales activity were historically low-interest rates, many retail and wholesale investors looking for high-yielding assets, and pent-up demand from purchasers/investors who remained inactive during the early stages of Covid-19.
The latest Market Intelligence Report for SME Business Sales is showing a number of new trends that have not been evident in the past two years. Previously we have had an environment with demand exceeding supply; however latest data shows that supply is increasing (more businesses are being listed for sale) and demand is declining (small reduction in Confidentiality Agreements being signed year on year). There are several reasons we believe this new trend is occurring and we have outlined those observations in the Market Intelligence Report - Read Here.
The key takeaway for business owners thinking of exiting their business in the next 1-2 years is you will need to be even more well prepared and have the best professional advice possible if you want to maximize the value of your business in a sale process. The data tells us there will be more businesses coming to market and fewer buyers over the short term; hence optimizing a sale process will take more skill and expertise than ever before.