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Times slightly riper for businesses to sell up

Thursday 24th June 2010

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An increasing number of business owners are planning to sell within two years, according to polling done for ASB Bank.

Profit replaces customer base as the most important element for valuation, the survey shows.

Some 89% of respondents chose profits before any other factor in the first quarter results from the poll, which has run since Q3 2008. Customer base is the second most popular determinant of value at 88.8 percent, while the state of the economy rated 71%.

There was also an 11% decline in the number of businesses intending to close, compared with the previous quarter, while there are signs that business values are rising again, with a one-third drop in the number of businesses said to be worth less than $250,000.

Around a quarter of those surveyed said their businesses were worth $250,000 to $500,000, 14% were between $500,000 and $1 million, and another 14% for firms worth between $1 million to $5 million, while 5% said their businesses were worth more than $5 million.

Most business owners surveyed believe is not a good time to sell.

The most popular means of realising the value in a business was through selling to an unidentified buyer, at 27%, followed by sale to a targeted buyer outside of the business, at 22%.

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