A new breed of buyers are now looking for businesses.
Partner Statement:
2019 is turning out to be an exciting and turbulent year indeed. We wanted to share some significant changes we’re starting to see in buyer and seller sentiment.
We won’t “wax lyrical” (an expression one of our Client’s uses) around the deterioration of lending conditions. Rather, we want to highlight for people looking to sell their business two industries that stand out to us. One is coming under the most stress, and the other is poised to show substantial growth.
As always, our unique and highly effective marketing strategies deliver market-beating results and conversion rates to confidentiality agreements/enquiries.
February
Businesses for Sale: 16
Buyers Enquires: 78
Confidentiality Agreements: 48
Offers Received: 7
Offers Accepted: 3
Settlements: 2
Regards,
Dan Levitus
Daniel Kogan
Food and Beverage Manufacturing
Despite being a supply industry to a more troubled segment of the market – Retail-Restaurants, we are beginning to see increased buyer enquiries on food manufacturing businesses. We believe this is driven by a new breed of buyer entering the market. Low cash rates and a sense of caution in the global markets is inspiring more advanced investors to seek viable places to park their money.
Businesses can be a great option, as they are often providing at least 30% annual returns.
As an example, and for the first time, last week we had 6 new buyer enquiries who are all ex Property Developers.
We are also seeing immense interest from high net worth individuals from South Africa and receiving regular calls in relation to suitable businesses for immigration purposes. We recently sold a chocolate manufacturing business in January to a South African Investor.
Currently, market rates for food and beverage manufacturing businesses will peak at
4.25 x EBITDA. However, most will transact between 2.5 – 3.5 x EBITDA.
We have a number of quality food and beverage manufacturing businesses coming to market shortly, so keep an eye in coming weeks and months.
Follow the link below to see a quality food/beverage manufacturing businesses showing massive growth, with untapped potential to export. At a trade show recently 80% of its enquiries were exporters!
Off-market Opportunity
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 new key accounts looking to jump on board. Just converting two of these accounts, 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: $100k plus outgoings
*All figures are ex GST
If you are interested email or call Dan Levitus at dan@vbaaustralia.com.au or
0450 326 146 to express your interest.
Retail-Restaurants
The market has downgraded expectations of Restaurant Market rates by around 15%. We are seeing a lot of business owners looking to enter the market and sell their businesses. This combined with less qualified buyers in the market as a result of stricter lending conditions has created a supply and demand issue.
Restaurants are trading at the lowest multiples seen since 2007, due to their high labour expenses long trading hours and low net profit margins.
The silver lining is that buyers will tend to gravitate towards the best Restaurants for sale, as some businesses will still meet lending criteria. If your Restaurant business exhibits any of the following, we predict that the market will still respond positively, and you may even find your business will beat market expectations.
✔ Ebitda of over $200k
✔ 10 + Year lease
✔ Current term with 4+ years remaining
✔ Established trading history of 3 years
✔ Credible financials
If a Restaurant does not meet these 5 key pieces of criteria, this is a great time for buyers to snap up bargains and ride out the downturn. Equally, if you own a Restaurant that is experiencing a pullback, you also may want to ride out the storm and reassess in another 12 months.
Make no mistake however, in order to do so successfully without committing yourself to losses the business must be able to meet the expenses of the operation (including your wage). If you are unable to do this, you are cash flow negative, and this can compound very quickly.
We don’t have many restaurants on our books for this reason, and we see there is still a decent scope in the Café segment. One of our favorite cafes for sale is
South of Wollongong Licensed Cafe Restaurant for $338,000 + SAV.
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.
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