Chris Small: ABC Business Sales managing director on demand outpacing supply in the small business sphere

Demand is outpacing supply in the small business market, as sellers wait out tough trading conditions while buyer interest is at record levels.

Recent data shows new business listings fell 10 percent in the year ended March, compared to a 10 percent increase in completed sales.

ABC Business Sales managing director Chris Small says there's been an uptick in migrants gravitating to smaller businesses - which has left an impact on prices.

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Episode Transcript

Speaker 1 (00:00):
I'd Heather do to see it. Well.

Speaker 2 (00:02):
Apparently demand is outstripping supply when it comes to the
sale of small businesses. There is a wrinkle though, for
anyone's selling prices are going down. This is from data
released by ABC Business Sales and the managing director, Chris
Smaller's with us.

Speaker 1 (00:13):
At Chris, Hey here, welcome back. How are you doing?

Speaker 2 (00:16):
Oh, thank you. I'm very happy to be back. Although
I'm going to be honest with you, while the bosses
are not listening, so I'm assuming they're not listening for
it this very minute. Doing it one day is something
doing it every single day from here on and is
kind of confronting. Do you know what I mean?

Speaker 1 (00:29):
I'm sure you'd be Okay.

Speaker 2 (00:30):
I think so too. I've done it before. Okay, Now, Chris,
why have we got the spike in demand?

Speaker 1 (00:36):
Look, there's a couple of buying groups that have really
come to the fore. You know, we've had over twenty
five thousand confidentiality agreement signed this financial year versus nineteen
thousand the year before. And look, we've really seen a
lot of there's still a lot of new migrants coming
in from countries such as India, China and the Philippines
and being more inclined to want to purchase a small
business than actually work for a big corporate. We've also

(00:59):
still got a pre steady flow of people being made
redundant out of the big corporates who then have to
look to replicate their income. And they're probably really the
two key groups that have sort of jumped on this
sort of business ownership to look to find some income.

Speaker 2 (01:13):
And why the price is coming down. Is this a
case of prices actually falling or is it simply that
the average is being skewed by lower prices.

Speaker 1 (01:20):
Yeah, it's definitely the latter there, Heather. Again, when you
think about those those Asian immigrants and companies, you and
they're generally their budgets below five hundred thousand dollars, So
we've had a real uptick and really quite small businesses
being sold for two three, four hundred thousand dollars and
really high volumes, and that's swed that skewed the average.
Another meaningful statistic we used to measure, you know, how

(01:43):
business prices are going as the multiple, so business is
usually profit times of multiple. Now that multiple has actually
gone up seven percent, so that's almost a better way
of realizing our prices of business is going up. And
the answer to that is, well, the multiples going up
seven it's gone up seven percent, and that's probably a
better tests. But yes, you are technically correct. The average
has gone down this because we've got a really high

(02:04):
volume of low price business has been sold at the moment.

Speaker 2 (02:07):
How do you think the business in the global economy
is going to just the uncertainty around what Trump is
doing is going to affect sales?

Speaker 1 (02:15):
Look really good question. I think a lot of these
businesses are quite domestically. Obviously, anything with an export element
to it that might be goodness. Twenty percent of the
businesses we sell, but eighty percent of the business we
sell are just domestic focused and they're more interested in inflation,
how much money people are spending domestically. So I would
suggest that really it's it's going to have a little

(02:37):
bit of an effect, but it's not going to be
material or meaningful.

Speaker 2 (02:39):
Yes, good stuff and please to hear that, Chris, Thank
you so much appreciated Chris Small, ABC, business sales Managing Director.
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