What Business Buyers want in 2017

There is little doubt that this year will be marked by political uncertainty both locally and abroad resulting in unknown risks to regulated industries and buyers taking conservative views towards the industries they invest in.

Early indications are that industries providing day to day essential services will be the beneficiaries of this mind set. If your business has some longevity and a diverse customer base who repeat purchase, expect the next 12 to 18months to be a good time to exit at a higher multiple than previously available.

In Demand Industries for 2017

• Transport and Logistics
• Food Production (wholesale)
• Industrial Manufacturing
• ICT Services

Due to the industry driven demand, there will be more competition for quality businesses. This leads to higher multiples with a bigger appetite for risk from buyers and shorter sale times.

Buyers are looking at risk factors around security of supply, contracted business (or work in hand) and robust management teams in place. The way you manage and articulate these parts of your business will not only influence the sales value but if done well will greatly increase your pool of potential buyers.

As far as the benefits of exiting an industry in a positive market go, you only need to look at the management rights industry for a prime example. Current sellers are exiting at 4 to 5 times Net Profit, where as early 2012 saw multiples as low as 2 and 3 times for the same businesses.

That trend can also reverse, so the timing of your exit can make a big difference to the value you will realize at sale time.

Troy Potter - Licensed Business Broker 0412 286 176