Top Five Predictions In The SME Business Sales Market For 2021

New Zealand’s industry leader in SME business sales, ABC Business Sales, shares its Top Five predictions for the country’s SME business sales market next year.

1. The average business price to experience double digit growth in 2021 (10%-12%).

FY20 experienced 4% growth on the average business price. Given there is now more certainty around the economy plus the upside of boarders opening up in FY21 alongside low interest rates and a number of people looking to enter business ownership due to changing circumstances, we are predicting double digit growth in the average business price.

2. The Government to allow KiwiSaver withdrawals to be used for buying existing businesses (as opposed to start-ups) in the same way that KiwiSaver can be withdrawn for deposits on house purchases.

Especially when considering that an investment in a SME business can provide elevated returns compared to property investment:

• The average business sales price of $653K is significantly less than the average house price of $725K
• The average annual return on a $725K residential investment property is $35,000, the average annual return on a $653K business is $215,000.

3. Buyer interest in SME businesses to continue its double-digit growth for FY21 compared to FY20 on the back of:

• Increased returning expats
• Continued low interest rates
• Increased unemployment in the corporate sector providing cashed-up, skilled entrepreneurs
• Point 2 above being actioned!

4. Five business sales categories/sectors expected to be top performers for 2021

• Food manufacturing & distribution sectors
• IT service sector
• Healthcare services sector
• Building and construction supplies sector
• Subscription businesses with positive cashflows

5. New business listings to increase by >20% for FY21 as business owners see the elevated prices they can achieve in a buoyant market.

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