In the second quarter of 2011, the number of businesses that were offered for sale in the market in Australia reached record highs. Although this situation corrected itself somewhat, 12 months later the second quarter of 2012 saw the number of small and medium businesses advertised for sale grew six percent. With more and more businesses coming onto the market, it will impact on valuations and will thus be advantageous if you buy a business in Australia. Although, it’s easy to point to the slowdown in the global economy as the culprit, the reasons are more myriad than you might think.
Reasons for selling
When the economy is booming, why would an owner sell? It’s simple,the seller can make a substantial profit by selling at the top of the market. That’s why you see larger enterprises buying up commercial businesses for sale even if the figures show that those very businesses are not very profitable as there are synergies to consider.
Secondly, even if the economy is stable and the company is doing well, it often comes to a point when the owner is looking for a change in scenery or just wishes to retire and this is understandable as it is difficult to sustain and grow a business when the inspiration and commitment is no longer there.
How to choose a business to buy
Knowledge and experience in the industry you are trying to enter into is an advantage when you decide to acquire a small business for sale in Australia. Ensure the reason for sale is valid and that the seller will provide adequate training and handover periods. Full financial disclosures of the busienss should be available to youwhen negotiating to agree to a fair price for the busienss.
Finding the right broker
On average, there’s an upsurge in the number of commercial businesses for sale in Australia during September, October and November of each year when businesses have completed their year end financials.
If you want to buy a business in Australia, it’s a good idea to meet and engage with the business broker so you can be provided with all the important information of the company (its market, operations, financials, lease, staff, etc.). It is normal that the seller pays the business broker commission on the successful sale, but it is important that you work with the right business broker who has the experience and skill in business valuation, sales, legal requirements, negotiation skills and network.