Selling your business in 2021 – Facts vs Fiction

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It would be no surprise that because of the far reaching and in many cases devastating effects of Covid-19 around the world, that any Kiwi business owner would be short-changing themselves by selling a business now. In fact, many business owners in New Zealand that we have spoken to are concerned that because of poor trading months post Covid; they now need time to rebuild the value of their business before they can consider selling it.

There is a lot of debate on the possibility of a ‘new normal’ of living with Covid, and the attempts of the rest of the world to eradicate it. The announcement of different vaccines gives hope yet raises more questions. Once the vaccines arrive, will they work? do we keep our borders locked forever?

FACT: Many Kiwis are no longer willing to leave their future in other people’s hands and are attracted to the prospect of being in command of their own financial destiny.

Increasing house prices in many major centres (homes where equity can often be found), and historically low interest rates, we have the perfect buyer storm.

FACT: Huge number of Kiwis returning home with their hard-fought wealth needing to provide both a home and an income.

For these buyers, a well-established business under management is a very attractive proposition, either to acquire in part or full. The quality of these business buyers coming back to New Zealand is remarkable.

FACT: Not enough good quality businesses to satisfy this genuinely insatiable demand.

The reason I stress on ‘quality’ is that there are plenty of businesses on the market creating noise, but genuinely good value propositions are getting snapped up in days, with multiple offers on the table. The equivalent of this would be a good property going to auction with many interested buyers bidding for the same asset.

FACT: This situation with Covid is anything but normal, and Covid has been largely eradicated in New Zealand.

After speaking to business owners across New Zealand, we have found that businesses that have returned to pre-Covid trading levels can clearly demonstrate any downturn as a one-off or non-recurring event that would have no effect on value.

Here I would like to point out that we strongly recommend YOU as a business owner speak to your accountant and your financial adviser to find specific information, related to your business and your industry. Yes, Businesses relying on international tourism have been worst hit and sadly there is no easy solution in sight. But there are some surprising victors also, like the accommodation industry that is piping hot right now with government assisted guests and domestic tourism driving business values higher than normal.

So, here is the simple truth: 3 bad months trading will not affect the value of your business IF it appears to be returning to normal.

Buyers are both well-financed and plentiful and it is not uncommon to have multiple offers on businesses being sold. It is indeed a strange time, but for those that are canny, now could be the time to sell.

A broker, like myself, adds value here, by sharing the knowledge, experience, and connections to sectors. We understand the challenges of your industry and successfully match buyers with sellers, saving you considerable time, effort, and money.

-Farrukh Mirza, Business Broker, LINK Ellerslie, Auckland. M.+64224297463, P.+64 905799226,

E. [email protected]

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