DRAMATIC INCREASE IN SMALL BUSINESSES FOR SALE
IS A CRISIS LOOMING FOR BUSINESS OWNERS THINKING OF RETIRING?
The volume of businesses for sale skyrocketed in the September Quarter from a previous record volume in the June Quarter, according to the latest BizExchange Index of Private Company Values.
Values remain at an all time low with three out of four listings with EBIT ratios below 2.
Insolvencies showed a marked increase in the September Quarter according to ASIC data.
Net sentiment in the market remains negative.
BizExchange Chairman David Bird commented that there were a number of factors contributing to negativity including major commodity prices softening, inbound tourism and foreign students down, uncertainty over the world economy especially Europe, and increasingly unsettled industrial relations domestically. Added to this residential property values are generally flat or falling.
Mr Bird said “Widespread cost cutting and growing retrenchments are reinforcing a cautious approach by consumers.
“Their common sense approach to reduce debt in times of uncertainty could exacerbate any downturn in Australia.
“Smaller businesses are usually the first to feel changes in economic conditions”.
He noted that it was interesting that the Federal Government, which overworked and misdirected the stimulus after the Global Financial Crisis when the economy was unusually buoyant, now looks like cutting back on expenditure when there are many signs of a general economic slowdown in prospect.
“The implications for business owners approaching retirement or waiting to exit are ominous. Downward pressure on values is now very likely”.