Businesses continue to delay selling

Thursday, 24 September 2009, 11:43 am
Press Release: ASB Bank

Media Release

24 September 2009
 

A glimmer of light, but businesses continue to delay selling.

·         Businesses still pushing out time to sell

·         Market sentiment towards selling business shows a small improvement

·         Many business owners do not know who will succeed to their business or how they will realise its value

·         Banking relationship manager’s advice gains in favour

The fourth ASB Succession Planning Monitor shows a continuing trend for businesses to push out selling plans with a net 6.8% increase in the 3+ year selling horizon. This trend is further supported by a net 5% decrease in anticipated business sales prior to the 2 year horizon. 

“This delay in planned selling horizons was expected, although against the trend when people were asked if it is a good time to sell, we did see a slight increase of  net 3.3% from -81.1% to -77.8%,” says James Mitchell, ASB’s Chief Executive Relationship Banking. “This is the first time this research has shown this measure moving positively revealing a small glimmer of a more positive sentiment starting to emerge.”

When asked why they thought it was a good time to sell, some business owners commented:

“We are still making a profit and a lot of companies are only breaking even; we are in a better position.”

“Because people who have been made redundant could be looking for our type of business [to buy].”

When respondents were asked about how they intended to realise the value in their business, it was concerning that almost a quarter of all business owners said they expect to sell to an unidentified/unknown buyer.  In a similar vein, 19.2% of people ‘don’t know’ how they will realise the value.

James Mitchell says “This confirms that in the current climate businesses are focussed on survival.  Focussing on succession remains important though.  It may even help ensure your business survives.  This is an opportune time for businesses to understand who they should be targeting to sell their business to in the future.   We believe many of the baby boomers will be looking to exit their businesses in the next 10 years so competition could be tough for selling.  It will be critically important to have a succession plan in place to make sure your business stands out from the pack.”

“It’s also really important for businesses to have a robust operating plan that includes regular risk, opportunity and financial assessments to help carry you through tumultuous times.”

“It is encouraging to see an increase in advice being sought from a banking relationship manager – an increase for small businesses of 6.6% net over this quarter.  “We’ve been putting a lot of focus on helping businesses of all sizes survive and thrive based on good solid planning.”

“Whether you run a small or large business, it takes time to incorporate succession planning into your timeline.  ASB has the tools to help people through all business cycles.  We offer a specialist succession planning workbook, expert personnel, and support services to ensure businesses can get their succession plans into shape.  We are also committed to monitoring and reviewing market sentiment in this area,” James Mitchell said.

ASB’s Succession Planning Monitor surveyed 421 privately owned or franchised small businesses (annual turnover under $1m) and medium to large businesses (annual turnover between $1m - $150m) over the April to June 2009 quarter. Full survey data is available at www.asb.co.nz/succession

Ends. 

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