Since 2007 there has been a five-fold increase in the number of businesses for sale. As with all markets the business market is dominated by supply and demand and this in turn is influenced by current business conditions.
Current business conditions in Australia are soft with many farmers in trouble with drought and aggressive customers, import competing businesses struggling with the high exchange rate and oversupply of many small retail and hospitality businesses.
This situation is exacerbated by excessive government regulation and less flexible industry laws.
Added to this is the general uncertainty, with increasing unemployment domestically and a world economic climate offering mixed signals.
In addition to those businesses being forced to sell because of the current environment there is an increasing number of retiring baby boomer owners approaching the market.
Accordingly the volume of businesses for sale is likely to remain at current high levels, placing downward pressure on business price levels.
Adding to this downward pressure is the impact of the internet and the fact that despite lower interest rates, stricter lending criteria are making it difficult for potential purchasers to buy businesses.
In these circumstances business values are unlikely to improve significantly in the short to medium term.
For potential buyers who are able to fund a purchase the current environment may be the best opportunity in a generation to buy a business. One group in a position to take advantage of this are Asian business migrants. Not surprisingly interest their interest in privately owned Australian businesses continues to grow.