While the economic upheavals of the last two years are not about to recede into the distant past any time soon, the second quarter of 2022 brings with it tangible hints of normality, along with further evidence of a generational shift in the make-up of serious business investors.
LINK Business Brokers Business Development Manager, Steven Matthews, says that with the country’s borders reopening and people traveling more freely once again, positivity about the future is being reflected in renewed transactional activity in the business sales market.
“Despite the remaining challenges ahead, buyer and seller confidence is definitely returning,” he says. “While there is plenty of talk in the media about rising interest rates, historically these remain on the low side when compared with past decades. This means there remain plenty of options for business buyers looking to acquire funding and service debt.”
Steven also says that in recent times younger Kiwis have identified the need to take control of their own financial destiny in a way that previous generations didn’t. Increasingly, the aspirational desire to build equity independently has replaced universal reliance on a government-issued pension to see New Zealanders through their later years.
“Business ownership is one of the best ways to build equity, and there is a noticeable generational shift in younger people aspiring to own their own business, rather than climbing the ladder within an existing company in order to help secure their future.
“What does this mean? Essentially, there are more buyers out there for businesses, especially within the SME sector. In tandem with this is the inarguable fact that baby boomers are looking to exit full-time working life; something that is occurring irrespective of other market or economic considerations.”
And as positivity returns, the types of businesses that are proving attractive to potential purchasers are also evolving.
“After a significant lull through the worst of the pandemic, smart buyers will once again be considering business investment in both the hospitality and tourism sectors,” he says. “There is no immediate fix in these industries of course, but with the borders opening comes undeniable opportunity. Industries seeing rejuvenated post-pandemic buyer demand include general service, manufacturing, construction and the import and export sector.
“Also consider that businesses in the hospitality and tourism sectors have been forced by circumstance to become leaner in order to survive the downturn. They have had to put their operating costs under the microscope in a manner that companies in other sectors might not have.
“Now we are starting to see the moment where those hard decisions will pay dividends as streamlined businesses showing better margins on the books come onto the market.”
“While the pandemic continues to cast a shadow, the months ahead still brim with possibility for both buyers and sellers alike,” Steven concludes.