Concerns over the Baby Boomer exit, resulting in an oversupply of businesses for sale and thus putting downward pressure on small business prices, have not eventuated in the marketplace. Purchaser demand has remained steady in many sectors, such that overall listing numbers have actually decreased by around 13% over 2023.
Brokers have reported that high interest rates on loans have not significantly deterred business purchasers. Multiples of profit paid for small businesses remain mainly in the 1 to 4 times range. This multiple range means that the servicing of loan repayments, even taking into account high interest rates, is well covered.
There is a growing number of investors entering the marketplace, who are recognising the strong returns compared to other asset classes such as property and listed equities.
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