SELLING a business in Western Australia appears to be a tale of big versus small, with the lower end of the spectrum proving tougher to sell than larger entities.
SELLING a business in Western Australia appears to be a tale of big versus small, with the lower end of the spectrum proving tougher to sell than larger entities.
Business brokers have noted that the shaky global economy has had a double impact on small business sales, reducing their appeal and demand.
"Smaller businesses are getting harder to sell," Schulz Partners managing director Ken Schultz said.
"Higher wages, rental costs and overheads means a business is likely to remain on the market unless it nets at least $250,000 a year.
"Any less and those looking to quit a job to run a business see no incentive. They could make more money on a mine."
Schulz Partners is ranked as WA's fourth largest business broker, with nine brokers on its team and $300 million in business assets under M&A consultancy contracts at the end of last financial year.
Gunnink & Co principal Jan Gunnink, whose firm ranks ninth in the WA Business News Book of Lists, sees franchises as a poorly performing area.
"Look beyond figures and think realistically about what you want to do," Mr Gunnink said.
Another issue impacting the market is the credit squeeze. Volatile markets and higher lending rates mean buyers may now find their purchasing power has dwindled as their own asset backing has been hit by the shake-out.
"Banks who would lend money five months ago with real estate backing would want the purchaser's property revalued," Mr Gunnink said.
But it was not all doom and gloom.Goodwin Mitchell O'Hehir principal Graham O'Hehir, who heads the largest business broking firm in WA with 17 brokers, said businesses in the fields of resources, engineering and wholesale remained in demand.
"Other clients are successful business people looking to run lifestyle resorts with a ready management structure, combining lifestyle and career," Mr O'Hehir said.
GMO turned over more than $100 million from around 115 sales last year, with transactions starting from $300,000 and averaging $900,000 per business.
Fortune Business Marketing's Ron Atkinson said recruitment agencies, law firms and paramedical services are in demand.
"Accounting practices are selling at up to 1.4 dollars for every dollar of turnover, the highest in years," Mr Atkinson said.
"High immigration and increased recognition of international professional qualifications are feeding the spurt."
