Business sales a positive barometer

The demand to buy New Zealand businesses remains very strong across most industry sectors with engineering and manufacturing, packaging and export businesses all reporting particularly high levels of local buyer interest.

So says LINK Business Brokers CEO Aaron Toresen, who urges us not to under-estimate the attractiveness of Kiwi manufacturing firms.

“While low value and mass produced items are typically dominated by Chinese imports, New Zealand niche manufacturers are typically robust and competitive enterprises with reasonably high barriers to entry,” says Toresen.

“It is difficult for off-shore manufacturers to compete for small run, custom or complex jobs and as such, local operators can remain both profitable and stable.”

He says the strongest demand at present is for businesses with enterprise values between $2m and $6m, where multiple offers are often seen.

Another area with consistently high levels of inquiry and transaction numbers are the food retail businesses, such as cafes, restaurants and takeaway operators.

“Average enterprise value in Auckland for these businesses in the second quarter of 2018 remained relatively consistent at $435,000 with sales volume increasing by nine per cent,” says Toresen.

On the buy side of the equation, there has been a marked increase in the number of expat Kiwis returning to NZ after successful overseas careers in IT, management and banking and looking to buy a business as a means to return to NZ. These purchasers tend to be well educated, well-funded and looking for businesses that are capable of being run under management with the potential to be scaled to larger operations.