It’s the best time to buy or sell a franchise, and it’s happening right before our eyes. We’re on the verge of a unique situation – a large transfer of business ownership here in Australia. Those business sales will mean enormous opportunities for a wide variety of players. The group that is creating this change are the Baby Boomers, the age group between 49 and 68. This group currently owns about 420,000 small businesses, which is more than half of the small businesses in the country. They’re preparing for retirement over the next 15-20 years, which will create a massive supply for anyone looking to buy a business.
On the flip side of this equation are two factors driving demand: the growing population of Australia and the new free trade agreement with China (ChAFTA). Between the immigration increases in recent years and the fact that the birth rate is now doubling the death rate here, our population will see incredible growth in the coming generation. Also with ChAFTA in effect, there is a sharp uptick in new immigrants and foreign business people looking to ride Australia’s growth by investing in small-to-medium businesses.
The result is what business broker Steve Finn is calling “The Great Handover”, a perfect storm of supply and demand where large numbers of Baby Boomers will be selling a business due to retirement and the growing demand from new citizens and foreign investors. Mr. Finn is the founder and co-owner of the largest business broker group in Australia (made up of 40+ offices under the Finn Franchise Brokers and Finn Business Sales brands), putting him in a unique position to monitor these developments as they’re happening. Business ownership is an almost universal dream among people, and this situation may provide more opportunities to realise that dream, in a shorter time span, than ever before in the history of Australia.
This provides a great opportunity to those who are ready to cash out and enjoy their retirement. That’s because the basic laws of supply and demand dictate that with the overwhelming demand being generated, the supply will not be given away at reduced rates for the sake of expediency. In other words, the retiring Baby Boomer business owners should be able to receive a better-than-fair price for their business without having to wait years and years for the perfect buyer to come along. Mr. Finn reports buyer enquiries are through the roof. “This is the best I’ve seen it, and it’s been building since about 2010. 18 months ago we were getting 500 buyer enquiries a month. Now it’s up over 1,000 and we’ve even nudged 1,500 a few times. In a niche market of selling businesses, that’s a lot of buyers. I’m predicting that in 2017 we’ll have more than 2,000 buyer enquiries coming through every month.”
Supply and demand are both in abundance, and both are growing at a quick pace. As they continue to grow, not only can the buyers and sellers see positive futures, but it’s great for economic growth in general. This is the ultimate win-win, except that it’s really more like a win-win-win-win. Buyers are winners, sellers are winners, the economy is a winner, and those that facilitate the entire process are winners – business brokers. A business broker is much like a real estate agent – except they are the “middle-man” in selling businesses, not houses. With success fees ranging from anywhere between $10,000 to north of $100,000 for selling a multi-million-dollar business, it can be a lucrative profession.
Steve Finn’s track record as Australia’s most prominent business broker with offices nationally from Townsville, to Ballarat, to Perth – means they have the pulse of this market as it moves. This also puts them in a unique position to help those who are looking to take advantage of this wave and sell their businesses. According to Mr. Finn, his offices are inundated with enquiries about buying or investing in Australian businesses – with more than 1,000 buyers every month knocking on their door he says. “It really is crazy – we need more businesses to sell. We’ve had to double our team in the past 18 months just to keep up with the buyers”. Sounds like there might be a lot of new signs going up in businesses all around Australia over the next few years – “Under New Management”.