If you were thinking about selling your business earlier this year, you may have found yourself second-guessing your decision in the past few months. Covid-19 has disrupted our world; our share market, economy and every Australian small business has felt the pinch in some way, shape or form.
Being cautious in times of large-scale change and disruption is both understandable and advised, as making big decisions when the future is unknown can be a risky approach. However, as restrictions begin to ease and life begins to return to a version of normality in each Australian state, businesses owners exploring their sale path are now questioning whether this is the right time to do so.
Here at Core Business Brokers, we have found that most sellers put their business sale on hold during the initial disruptions of Covid-19. This was a decision that we supported until we could assess the market and gain further information about the Government’s plans for Australia during this pandemic. Most buyers that were expressing interest in our business listings also pressed pause, extensions were made, and agreements were formed to allow everyone some breathing space and time to absorb and adapt to the changes around them.
We are happy to report that here at Core Business Brokers, our business listings have now resumed. Most Australian businesses are operating at some capacity, whether that is altered services or changes in patron capacity to abide by Government restrictions. Negotiations have resumed and the reasons for buying/selling have returned to the table after a quick hiatus. Buyers need to know that the business going forward is still viable and that future profits can be demonstrated in some way to feel comfortable. There are a few ways that this can be achieved to provide both seller and buyer with the comfort to proceed with the sale.
It is important when embarking on your business purchase journey as a buyer, to review past financials to paint a clear picture of the business’ profitability pre-covid-19 and to understand what ‘normal’ operations look like in the business day-to-day. With this in mind, many of our Sellers have noted minimal negative impact and this has been discussed with interested buyers. We are working with our sellers as to how they will be able to provide a due diligence to confirm that a buyer can rely on the historical financials for the future.
For some businesses, however, Covid-19 has disrupted operations, and this has dampened their outlook when it comes to the sale of their business. Our suggestion for those businesses who have seen a downturn in profitability, a loss in staff numbers, potential closure or other negative impacts is to be transparent with prospective buyers. Instead of focusing on the negative, create a plan and present this to the buyer with steps to implement to return the business to its pre-Covid state. Discuss what you would do if you were to remain the business owner. This will calm the nerves of the buyer and make them feel supported in the process. Again there are a few processes that can be included in a sale contract to achieve this.
It’s worthwhile to note that the Federal Government’s JobKeeper package has been a success in keeping many businesses afloat throughout this time, allowing them to retain staff despite a short-term decrease in revenue. With JobKeeper allowances in place, this can allow a business sale to take place successfully and efficiently during this time – allowing staff to retain their jobs and the transition to be smooth, as the JobKeeper legislation states that eligible employees will continue to receive this supplement, even if the ownership of the business changes (provided the new business owner continues to operate the same business)
If you’d like to discuss your options and chat through your business sale journey, contact Core Business Brokers today, on (02) 9413 2977, or email Roy on [email protected]. We value honesty and experience and will discuss your journey openly, setting realistic expectations and chatting through all options. You can trust Core Business Brokers to set your mind at ease and your business down the right path.