Business Succession - Talent Pool Available Now
The numerous lockdowns have been frustrating many business owners contemplating succession, particularly in Auckland. Some have delayed plans or been in a holding pattern. Others now however are taking the opportunity to start moving. The talent pool of people with capital is here now and they also are ready to move.
We are seeing a different sentiment among business owners during the latest lockdown, with two main groups:
Group 1- I Need To Move Forward– Get Me Help!
This latest lockdown on the back of several, has worn some business owners out – especially those in Auckland. Many were talking about exiting prior to the pandemic and have delayed thinking there may be a better time. This hasn’t proven to be the case and to be fair, few of us expected lockdowns to continue into 2021.
Platform 1 have had many more calls from this group of people, looking to re-engage us with an exit strategy they planned in previous years, but had held off. Enquiry rates have increased significantly from both this group and other owners realising Covid will be here in some form for perhaps years to come.
Quotes have included “ I don’t want to go through another lockdown” and “I am over it”. We call this "Covid Fatigue".
There has been a very quick transition of these arrangements and lockdown has not got in the way.
Group 2 - I Have Another Reason to Delay
Exiting your business is a significant emotional exercise putting, aside the financial interests. It’s often a key part of the owner's life and understandably a big decision. Covid has given them what they believe is a rational reason to delay further.
Comments have been :
“ I need to build my business up again first as I had a poor year due to Covid and this may be reflected in value”
“ I don’t think there will be a buyer out there “
This group will continue to delay planning until they feel confident that they can build their business back up or their perception of the market improves. But will the same large talent pool be around then ? Will their business be in any better shape ? Will another unexpected event occur ?
But The Talent Pool of Business Acquirers is Strong
There is a large pool of people who have been looking for good businesses to buy into for some time. They have the capability to grow a business and the capital to invest .This increased interest is backed up by statistics from Platform 1.
The open rate for business opportunity emails to the buyer database has gone from 32.9% in June 2020 to 39.5% in our latest October email. Those who click through to find more information on the opportunities has gone from 2.6% to 7.1 %. Website traffic to this area of our website has increased 30% over the same time last year and direct approaches to our team are also increasing.
People are looking to move into business opportunities after the uncertainty of the last 18 months. Many have a clearer picture of the future having seen other countries open again.
It seems likely that this pandemic will be here in some form for years. The reasons to wait for what may be perceived as a better time are decreasing. At some stage decisions on succession need to be made and now is the time to access the pool of potential acquirers.
About Platform 1 - Market Leaders In Business Owner Transition
Platform 1 are the market leaders in Business Owner Transition and works with private business owners requiring succession. They specialise in finding people with capability and capital who gradually transition into a business, buying the owner out over time. This can be a partial or full buyout. They work with businesses within the $2M to $20M turnover region across New Zealand.
Author : Mike Warmington - Director Platform 1 NZ Ltd