Best Industries to exit in 2019

21 May 2019 5:54 PMTroy Potter

All Industries experience cyclical highs and lows of demand which in turn effects industry multiples & exit prices. Here are my picks for the top 3 Industries for business owners to exit this year based on them being in a cycle high that may not last.

Number 1 - It's no surprise that the Allied Health Care sector is still in high demand from business buyers due to high barriers to entry and traditionally high profit margins. The ageing and wealthy Baby Boomer demographic also supports double digit growth projections for decades to come. As it is currently easier to grow these businesses through acquisition rather than achieving organic customer growth, we have seen continued competition for businesses for sale in this sector and higher sale prices by comparison.

We are now at the high point for Industry Multiples. Increased investment into the industry, a reliance on skilled labour and high margins has made it a big target for disruption. AI applications and tech hardware is now maturing and will inevitably lead to business owners competing on business improvement outcomes in order to grow. There is still plenty of good news for the Allied Health Care sector but as a business owner thinking of selling in the near future, this is a great time to maximize your exit price.

Number 2 - ICT or IT, Voice and Data businesses have been experiencing consolidation for some time. An explosion in the uptake of new technology by customers, and improvements in interoperability, have made it easier to integrate these types of businesses and cross sell products to the newly combined customer base. Customer acquisition costs and recurrent revenue models have added to the industry appeal for Business Buyers.

"Customers will be more willing to change providers as they become less reliant on outsourced tech support"

It won't last forever. ICT Industry consolidation has been occurring for some time and a new generation of tech savvy business owners have arrived. They are not scared of IT, Voice and Data services and they understand how to leverage the power of big tech platforms in the SME market. Customers will be more willing to change providers as they become less reliant on outsourced tech support, and cloud based operating systems will make it harder for small and mid tier operators to survive.

"Retail outlets have added e-commerce to their offerings"

Number 3 - Transport and Logistics has received continued attention from Business buyers for several years as they sought to buy businesses providing essential services that would always have a level of customer demand. The change in retail shopping habits from Malls to Online has supported modest industry revenue growth. Retail outlets have added e-commerce to their offerings and products now made the trip from shop to home via courier rather than the customers car.

However, as the e-commerce environment matures, big players are emerging leading to a decline in smaller retailers. Larger distribution centers will make it harder for smaller operators to compete. A long period of low fuel prices and cheap asset finance has also left margins vulnerable. There is still buyer demand for Transport and Logistics businesses, and consolidation amongst the larger players will add to competition for acquisitions, but this will change if margins come under pressure.

INSIGHT business sales works with business owners to broker business sales with high compliance and technical barriers with an enterprise value of $500k to $10M. Feel free to get in touch for a more detailed view on your Industry and Business exit plans.

Troy Potter 0412 286 176 troy@insightbusinesssales.com.au www.business-sales.com.au