Market Insights

DEMAND IS UP AND BUSINESS SALES ARE BOUNCING BACK

ABC. Business Sales’ recent Market Intelligence Report has highlighted that the business sales market is experiencing a significant gap between supply and demand which has accelerated in the last six months. The excess demand and reduced supply characteristics of the current market have resulted in elevated prices for businesses in all industries apart from hospitality and tourism.

While COVID-19’s negative impact on purchaser enquiry levels is clear, under Level 4 lockdown in April-20, there was a significant drop-off when uncertainty was at its highest. However, post April-20 enquiry levels accelerated to exceed the previous year, and this is driven by three key demand factors at play: • Returning expats • Newly unemployed looking to business ownership to replicate lost income • Low interest rates making business ownership a more attractive investment

The COVID bounce back occurred from July 2020 onwards when business sales volumes started exceeding the volume for the same period last year with a cumulative growth rate of 24% which confirmed a V-shape recovery for the industry.

ABC Business Sales volumes for 12 months to March 2021 are up 2%. This is the result of a very strong market where the majority of businesses listed for sale are being sold.

The last six months of confirmed sales are 36% up (235 vs 172) for the same period last year, with many businesses being sold at above asking price and getting offers within the first 10 days of the marketing campaign. For the twelve months to March 2021, ABC sold 380 businesses vs 371 for the same period last year.

The average price for Hospitality businesses ($0-$5m) has seen an 8% decrease for the 12 months to March 2021. It has been well documented the adverse effects COVID-19 has caused this industry and the data presented backs up those thoughts.

ABC expects Hospitality prices to increase in the next 6-12 months as COVID-19 becomes less of an influence on the industry.

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