Business “Sale of the Century” Looming

December 2015

Thousands of Kiwi businesses will be put up for sale in the next five or so years due to the ageing population according to new research conducted for the banks by research agency TNS.

Five thousand middle sized businesses earning between $2 million and $25m and just over 190,000 smaller businesses are expected to be put on the block.

However fewer business owners are expected to follow the traditional method of selling to family members with just 16 per cent of business owners expecting family takeovers.

Selling a small business with a limited customer base is less attractive than selling a larger, diversified enterprise. As a result, the research indicated that a third of businesses intended to acquire another business in the next two years to make their businesses more saleable.

The expected sale of the century is leading to strategic change within banks. ASB has set up a Capital Solutions unit with specialists able to help mid-market business owners prepare their businesses for sale, including helping with things like acquiring other businesses and bringing in new investors.

It made for good business sense for the bank. A happy business owner who sells their business can remain a profitable client, if they choose to let the bank’s wealth management operation help them invest their money.