APRIL 2019 MARKET UPDATE





Why is April such an important month for offers?



Partner Statement:


April is looking to be a massive month for offers at VBA. In the first week of April Dan and Daniel already have $4,650,000 worth of offers accepted on businesses and we are expecting 3-4 more to be accepted by the end of the month.


Offers in April are so important as it is the last month before the clock starts ticking for Parties that want to achieve the holy grail of perfect settlement dates:


... You guessed it! The 1st of July.


The 1st of July is by far the cleanest day for business sales to complete.


Operations, staffing, suppliers, accountants – the whole ecosystem of the business will appreciate such a swift clean cutoff date. It is no wonder that more settlements occur on this day than any other!

"But the 1st of July seems so far away?"


Well, it is and it isn’t. It may feel like a lifetime if you are in the pressure cooker of the deal already. From the time the offer is accepted, the settlement process can take anywhere from 6-12 weeks.


6 weeks is realistic if there aren’t any issues along the way. Hey, though we are talking about a business sale here – there are always hurdles to overcome.


In short, if you want your settlement date to be timed specifically at the end of the financial year, you should consider April the cut off month for having the offer confirmed.





March Analysis


We have wrapped up March with around $2,700,000 worth of businesses sold by Dan and Daniel.


Looking at the table below, in comparison to February, you can see that enquiries increased in March by around 33%. So this may indicate that the market is improving.


However, the key indicator in our view, is the conversion of enquiries to confidentiality agreements, as this is the true measure of the quality of the buyer and in some cases the quality of the market at large, so this would indicate the market is moving backward.


As you can see the conversion rate declined from 61% to 47%. The reason an enquiry would not be converted to a confidentiality agreement is that we have assessed them to be unqualified in their ability to pay for the business or operate it effectively.



Another reason could be that they simply have not responded to our efforts to get in touch with them once they have enquired, suggesting a lack of serious interest.


Often buyers are enquiring on many businesses at a time, with the intention of just “feeling out” the market or process, yet they have no real intention of buying a business in the immediate future. One of the key roles of a Business Broker is to filter these buyers out early on and qualify the serious candidates.


March

  • Businesses for Sale: 16

  • Buyers Enquires: 104

  • Confidentiality Agreements: 49

  • Offers Received: 7

  • Offers Accepted: 2

  • Settlements: 2

  • New Listings for April: 3


February

  • Businesses for Sale: 16

  • Buyers Enquires: 78

  • Confidentiality Agreements: 48

  • Offers Received: 7

  • Offers Accepted: 3

  • Settlements: 2

  • New Listings for March: 2


You will see the average business received 3 qualified enquiries for the month of March, which means that information on each business went out to 3 people. This should be enough to maintain traction until an offer is accepted month on month, provided the business is priced properly.


Here is a video on the importance of pricing a business properly.


CLICK HERE TO WATCH



What's in Store for Buyers in April?


This one-stop shop in retail fit-outs specialises in a vast range of offerings, all of which are provided by the experienced in-house team, allowing to maximse profits by cutting out the 'middle-man'.





This industry leader has seen significant growth year on year and is positioned in a part of the building /construction/design market that continues to flourish even when other sectors drop.


With a guaranteed pipeline, low overheads and an award-winning team; this business is a sound investment for any industry professional, a savvy investor or established business to acquire a bigger piece of the market.


Low rental expenses for both office and factory, combined amount equates to less than 2% of turnover.


Fully-managed with a professional team in place. 2019FY forecasted turnover to reach $6,000,000.


Expected profits are on target to exceed those of years past; with a steady flow of return clients as well as new ones, there is never a shortage of work. With a recent recruitment drive together with significant training / strategic processes that have been implemented the business is well prepared the future growth.


CLICK HERE TO ENQUIRE


Our VBA Pipeline


We’ve also listed some opportunities below that are currently in our pipeline. The reality is we will probably convert 40% of these into listings in the next 3 months.


If you would be interested in any of these, let us know because this really helps motivate Vendors and it also creates a rare buying opportunity for you before the business hits the open market.


You would be surprised what can be achieved off-market, we always are!


$1,000,000 +


✔ Coffee Roaster including freehold circa $2M - $2.2M

✔ Coffee Roaster circa $6M - $6.4M

✔ Civil Contractor circa $3M – $3.5M

✔ Master Franchise License Food Retail circa $6M - $6.5M


$0 - $1,000,000


✔ Multistore Retail Concept circa $650k

✔ Lighting Shop circa $100k

✔ IT Partnership Deal (partial sale) circa $200k


If any of these wet your appetite, call Dan on 0450 326 146 or Daniel on 0410 620 918.


The Revenue of this business for sale could double overnight!



We also have an exciting off-market opportunity that has just upgraded to a premises that is 4 x larger and commenced new operations. This could possibly be one of the best buys we have seen in years, as this growth has not yet been priced into the business.



The business can now supply much larger orders, which historically, it had to turn away.


Currently, the Vendor is in early discussions with multiple key new accounts. Converting just two of these could double the revenue of the business almost overnight!


✔ Asking price: $450,000 plus SAV

✔ Revenue: $1,800,000

✔ Gross Profit: $1,332,000

✔ Base Rent: $100,000 plus outgoings


*All figures are ex GST


If you are interested, call or email Dan Levitus on 0450 326 146 dan@vbaaustralia.com.au to express your interest.


Wishing you great success in business.


Kind Regards, Daniel Kogan & Dan Levitus



Our mission is to transcend the standards of the business broker industry, and this means so much more than just selling businesses.


We would love for you to be part of our community.



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From all of us at Vision Broker and Advisors, we really look forward to working with you.

Good luck, and make sure you have a look at our business for sale.

https://www.vbaaustralia.com.au/businesses-for-sale-vision-brokers


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30 + years experience 

in operating, selling and buying

businesses

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