Fear, lack of knowledge cripple business sellers

Staff Reporter

One in two people who sold their business were disappointed with the outcome, the result of inadequate knowledge and fear at the time of sale, a study has revealed.

“Levels of confidence are low when it comes to selling a business, and the study also showed us that confidence is closely linked to knowledge,” said Wayne Tower, head of Macquarie Relationship Banking’s commercial real estate segment.

“By seeking out advice and insights from specialists, principals can be better equipped with knowledge about succession planning strategies, exit options and even the sales process, which in turn may help to boost their confidence, ensuring a better outcome for all.”

The study, Mood, Life & Money – Macquarie Insights’, focused on Australians’ life and financial decision-making, as well as general mood and reasons for it. The study was conducted in September 2011 and involved a qualitative research program of 12 group discussions across the nation prior to an online survey of 1,600 respondents.

The study also revealed that almost one third of business owners sell their business between the ages of 45 and 59, a time when the greatest fear among males is not having enough for retirement.

“Selling a business is often seen as the final step towards retiring,” Mr Tower said.

“Having enough for retirement is a major concern for many, so it’s critical that the sale of a business works for the vendor as well as the purchaser.”

Macquarie said its 2011 Commercial Real Estate Benchmarking Survey highlighted a significant demand and supply imbalance in terms of business acquisition opportunities, with almost 50 per cent of respondents stating their intention to grow through acquisition versus none planning to sell.

Commenting on the current business sales environment, Mr Tower warned potential sellers to keep pace with market reality: “With such a demand and supply imbalance, a vendor may well be optimistic about price, but they also need to be careful that this figure is not being solely driven by what they want or need for their retirement. Above all, it needs to be a realistic reflection of market value.”

“The retirement plans of many principals took a hit during the height of the global financial crisis, which has led to some having to re-evaluate their exit strategy and timeframe.

“This should be a lesson for principals that they should plan their succession strategies well in advance of their eventual exit, ensuring time and the ability to make adjustments as necessary that will keep them on track to achieve their retirement goals,” added Mr Tower.

A recent Real Estate Business straw poll revealed that 58.8 per cent of the 177 respondents didn’t have a succession plan.

“Like everything, if we want success we must plan and the sooner and more extensively we plan, the better and more successful the outcome,” Rod White, chief operations officer and group trainer at Yong Real Estate, told Real Estate Business in response to the straw poll result.

Staff Reporter

One in two people who sold their business were disappointed with the outcome, the result of inadequate knowledge and fear at the time of sale, a study has revealed.

“Levels of confidence are low when it comes to selling a business, and the study also showed us that confidence is closely linked to knowledge,” said Wayne Tower, head of Macquarie Relationship Banking’s commercial real estate segment.

“By seeking out advice and insights from specialists, principals can be better equipped with knowledge about succession planning strategies, exit options and even the sales process, which in turn may help to boost their confidence, ensuring a better outcome for all.”

The study, Mood, Life & Money – Macquarie Insights’, focused on Australians’ life and financial decision-making, as well as general mood and reasons for it. The study was conducted in September 2011 and involved a qualitative research program of 12 group discussions across the nation prior to an online survey of 1,600 respondents.

The study also revealed that almost one third of business owners sell their business between the ages of 45 and 59, a time when the greatest fear among males is not having enough for retirement.

“Selling a business is often seen as the final step towards retiring,” Mr Tower said.

“Having enough for retirement is a major concern for many, so it’s critical that the sale of a business works for the vendor as well as the purchaser.”

Macquarie said its 2011 Commercial Real Estate Benchmarking Survey highlighted a significant demand and supply imbalance in terms of business acquisition opportunities, with almost 50 per cent of respondents stating their intention to grow through acquisition versus none planning to sell.

Commenting on the current business sales environment, Mr Tower warned potential sellers to keep pace with market reality: “With such a demand and supply imbalance, a vendor may well be optimistic about price, but they also need to be careful that this figure is not being solely driven by what they want or need for their retirement. Above all, it needs to be a realistic reflection of market value.”

“The retirement plans of many principals took a hit during the height of the global financial crisis, which has led to some having to re-evaluate their exit strategy and timeframe.

“This should be a lesson for principals that they should plan their succession strategies well in advance of their eventual exit, ensuring time and the ability to make adjustments as necessary that will keep them on track to achieve their retirement goals,” added Mr Tower.

A recent Real Estate Business straw poll revealed that 58.8 per cent of the 177 respondents didn’t have a succession plan.

“Like everything, if we want success we must plan and the sooner and more extensively we plan, the better and more successful the outcome,” Rod White, chief operations officer and group trainer at Yong Real Estate, told Real Estate Business in response to the straw poll result.

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