2021 was another busy year for the sale and acquisition of SME businesses. The appetite for acquisition remained strong with plenty of well-funded buyers in the market. At the same time, we were able to bring to the market a good number of businesses for sale in our core sectors, with many business owners deciding to hang up their boots for retirement. Whilst in many cases retirement was overdue, we saw more and more business owners contemplating an earlier exit from their business.
So coming into 2022 we continue to take on well established, profitable and sustainable businesses and we look forward to bringing a number of new sale mandates to the market in the coming months.
Whilst the pandemic and resulting lockdowns continued to affect businesses in the hospitality, events and retail sectors, other businesses have rebounded well, in many cases seeing a significant uptick in demand even when compared to pre-pandemic times. The technology and B2B service sectors have enjoyed stronger demand, as have many engineering, facilities management and related businesses which have been able to continue working with appropriate measures in place.
As always though, buyers’ focus remains on the sustainability of the business in terms of its management, key customers and prospects for growth.
In replenishing our stock of businesses for sale in 2022, we remain confident of achieving successful sales of our clients’ businesses and, and here is why:
- Our clients and contacts in the engineering, construction and business services sectors report that they remain busy, with a strong pipeline of new business.
- Valuations have in the main remained at and even improved on pre-pandemic levels, both in terms of multiples of earnings and buyers taking a medium to long term view.
- There are a good number of infrastructure, building and engineering projects underway in NZ. In these times, there is a general consensus that the government will be keen to bolster the economy by ensuring these projects continue to be funded.
- With continuing confidence amongst business owners and investors looking to expand their businesses, acquisitions represent an immediate means of achieving compounded growth.
- There remains a high level of cash reserves in both trade buyers’ companies and investor groups’ funds, ready to acquire profitable and sustainable businesses.
- Interest rates remain low for now – even if the Banks are beginning to nudge up rates – thus enabling higher ROI on acquisitions.
Which businesses will sell well in 2022?
Whatever the economic conditions when it comes to sales, mergers and acquisitions in the SME market, certain factors hold true, perhaps now more than ever. Businesses which sell well typically have the same traits, they:
- Operate in a niche market with strong barriers to entry
- Have consistent recurring revenue, with clients often locked in by a service contract
- Have strong profit margins
- Demonstrate tangible growth and opportunities to expand
Such businesses include the sectors listed below. This is proven by the acquisitive demand for such businesses that we have seen over the last 5 years or so.
- IT support and telecommunications
- Precision engineering for medical laboratory and food processing markets
- Facilities management, building security & fire systems, and commercial cleaning
- HVAC, refrigeration and vending / catering equipment maintenance
- Software development and Software-as-a-service (SAAS)
- Logistics and distribution
We have hundreds of active buyers on our database and consistently receive at least 20 enquiries for each business we market in these sectors.
Good businesses with sound returns will always sell well. It is also best to sell while you are still successful and enjoying it.
Not sure whether now is the right time to sell your business? Talk to us now
We are always happy to offer advice on valuation and what performance metrics you need to achieve your desired deal value, as well as offer general advice on the various options for exiting your business and when is the right time to sell.
