Latest / Best of Business / Chris Small: ABC Business Sales Managing Director says businesses are selling like hot-cakes

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Chris Small: ABC Business Sales Managing Director says businesses are selling like hot-cakes · Best of Business

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  Speaker 1: You're listening to a podcast from Newstalk SEDB. Follow this
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  Speaker 2: In the New Zealand. Dream of owning our own business
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  Speaker 2: very much alive. As we learn five hundred and three
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  Speaker 2: businesses were sold in the past year to June, which
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  Speaker 2: is up nineteen percent. Average sale price is up sixteen percent.
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  Speaker 2: You can get a business for eight hundred and seventy
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  Speaker 2: one thousand dollars hospitality Hello, prices up twelve percent. Well,
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  Speaker 2: what's that about? You'll find generally there are thirty four
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  Speaker 2: buyers per listing. So Chris Smaller is the ABC business
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  Speaker 2: Managing director and is back. Well this Chris, very good
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  Speaker 2: morning to you.
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  Speaker 3: Mikeyo very well.
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  Speaker 2: Indeed, explain this hospitality thing to me, and the media
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  Speaker 2: is festooned with misery and woe. You cannot run hospitality
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  Speaker 2: for love nor money, and yet your figures show exactly
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  Speaker 2: the opposite.
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  Speaker 3: Yeah. Look, the maturity of those buyers are commcquation travel.
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  Speaker 3: So we have a lot of Asian and Indian buyers
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  Speaker 3: entering that sector. They seem to be able to run
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  Speaker 3: or those business has reasoning, Well I wouldn't. That's all
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  Speaker 3: milk and hunting out there that there certainly are ones
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  Speaker 3: that are dropping a way, and remembering when most businesses
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  Speaker 3: drop away, there's someone who comes in and fills that gap.
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  Speaker 3: So sermin, there's no lies around. People are struggling in
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  Speaker 3: certain parts of it, but there's certainly plenty of people
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  Speaker 3: caving up to get back in there. The low barriers
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  Speaker 3: to enter do make an attractive industry for certain ethnic groups.
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  Speaker 2: How do we explain the average cell price being up
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  Speaker 2: sixteen percent? See housing's not up sixteen percent? Why a
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  Speaker 2: business is up sixteen percent?
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  Speaker 3: Look, majority of it is driven by we've had a
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  Speaker 3: high proportion of business has been sold above the one
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  Speaker 3: million value, so that's essentially bigger businesses. From the last
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  Speaker 3: twelve months, we've had a really high proportion of businesses
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  Speaker 3: being sold in that greater one million businesses. Evaluations are
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  Speaker 3: slightly different houses where it's actually driven by profitability. So
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  Speaker 3: how much profit a business makes is in times by
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  Speaker 3: a certain number. That multiple hasn't really changed a lot.
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  Speaker 3: That's probably a better reference. They's stayed stayed pretty fat.
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  Speaker 3: But we've just had bigger businesses being sold last twelve month, when.
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  Speaker 2: When I've got thirty four buyers per listing. Does that
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  Speaker 2: mean when I list my business the phone rings Because
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  Speaker 2: that's a lot of people, isn't it.
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  Speaker 3: Absolutely? So, our most popular businesses we get up to
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  Speaker 3: So we get up to one hundred. What's called confidentiality agreement,
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  Speaker 3: So look at a business for details behind the business.
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  Speaker 3: You need to sign a confidentiality agreement, so that means
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  Speaker 3: you're serious. Our most popular businesses we get north of
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  Speaker 3: one hundred of those signed. So certain businesses really attract
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  Speaker 3: a high proportion of people.
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  Speaker 2: What's hot?
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  Speaker 3: Look anything that's got contracted revenue, so we've got childcare,
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  Speaker 3: age care, wholesale distribution, anything and also you laugh, might
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  Speaker 3: but anything that's got the headline of you can work
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  Speaker 3: from home a year business where you can work from
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  Speaker 3: home attract And that's the truth. Through are certain they
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  Speaker 3: speaks that the track Kiwi buyers.
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  Speaker 2: How many sales are stressed sales?
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  Speaker 3: Look, I would say out of that five hundred, you'd
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  Speaker 3: guess between five and seven percent, anywhere between twenty and
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  Speaker 3: between ninety s nids. But people don't buy businesses that
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  Speaker 3: don't make money, Otherwise you're just setting yourself up for
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  Speaker 3: a lot of trouble. We only sell businesses where they're
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  Speaker 3: actually making a profit.
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  Speaker 2: What would you say, overarching the story is here because
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  Speaker 2: this seems to me to be a positive story, arguably
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  Speaker 2: more positive than the broader economy at the moment. Therefore,
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  Speaker 2: is it about people marched to their own tune. They're
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  Speaker 2: going to do what they're going to do, and that's
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  Speaker 2: how it works.
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  Speaker 3: Well, there's it's really I bought it down to this.
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  Speaker 3: So demand is a lot higher. People are a bit
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  Speaker 3: about bringing their businesses to make can't you see it
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  Speaker 3: by the trade me listening to it down by five percent.
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  Speaker 3: On the other side of the coin sign company JA
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  Speaker 3: agreements are an all time high. So you've got demand
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  Speaker 3: exceeding supply by quite a bit. Life demand is a
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  Speaker 3: key group. There's forty percent of people wanting to buy
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  Speaker 3: a business of buying it for the job security or
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  Speaker 3: a career change, and that same forty percent translates to
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  Speaker 3: their age group between forty six and fifty five. So
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  Speaker 3: you've got a real trend helping with people have probably
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  Speaker 3: in a corporate job or in a normal salary job,
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  Speaker 3: get to their mid forties and going geez, I'm not
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  Speaker 3: so keen to either a carry I'm working here, I
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  Speaker 3: don't know how secure my job's going to be. I'm
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  Speaker 3: going to look at business ownership as my sort of
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  Speaker 3: to finish off our career, make some more money, and
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  Speaker 3: that's a bit more secure. Also, people need to now
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  Speaker 3: realize they need to work for longer and can't just
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  Speaker 3: retire it, you know, late fifties, early sixties because less
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  Speaker 3: expensive and it's no longer viable. So I think all
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  Speaker 3: those things are paying into the demand, the demand sort
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  Speaker 3: of aspects of buying a business.
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  Speaker 2: Well, it's a pleasure to have you on the program.
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  Speaker 2: Chris grad Insight Chris Small, who's the ABC Business Managing director.
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