Most of the people we work for are retiring, and they have spent decades building their businesses alongside their staff, who, over time, have become more important to the business owner than just an employer-employee relationship.

So, it is quite common to have a conversation at the beginning of the business for sale Auckland process about how they are not looking to sell to an entity where it could be detrimental to the future of their key staff. We have seen owners take deals that financially are not quite as good as another offer because they can see a better future for their staff and their families.

In that 1 to 10 million dollar sector, it can range anywhere from a 1 to a 5 times multiple on the pre-tax earnings of the business. A one multiple would represent more of a job than a business, with no barriers to entry and clear and present risks around the profit.

Then on the opposite end of the scale, a five multiple can apply where the risk around the future earnings of the business is low. It has great growth prospects, and everything else about the business is unquestionably safe. It has to be an exceptionally sound proposition to command a multiple of 5, and we have achieved that level and more in a business for sale Auckland process, where the business has ticked all the boxes, and the earnings have been calculated properly.

Normally, a business is valued on its risk profile going forward. So, someone who’s made an offer to buy a business has normally arrived at a value by ascertaining what impact any associated risks could have on the business. So, due diligence should be about verifying everything they already know and looking again at every single part of the business and verifying whether it’s going to be the same, better or worse under their new ownership, after the current owner has gone.

Everything that a buyer’s independent due diligence team is going to want to look at. Historic finalised end-of-year accounts and P&LS for the year we’re in. Products and services by revenue for recent years. Customer revenue ratios. Lease agreements on the premises. Supplier agreements. Customer service agreements. Condition of the plant and equipment. The normal stock holding and what’s obsolete. We need to understand the organisational structure of the business as well as any anomalies in the staff employment contracts.

We have to understand the business in its entirety so we can ascertain an agreed value range that is going to stand up to scrutiny with a buyer’s due diligence team. We then put together an information memorandum that is informative and accurate, with enough of the right content to engage the right buyer without giving away any intellectual property. Any people we deem potential buyers are carefully vetted, face-to-face, to ensure they are the right fit for the business going forward.

Our business owners will only meet a handful of qualified buyers who we know have the financial means to complete a transaction and the skillset to take over and grow the business. That is what separates professional business brokers Auckland from more generalised sales platforms.

Very much so. Almost everything we do is off-market. It is very rare for us to get a client who wants a public sale process. Most times, buyers are already in our databases. Everything is wrapped up in confidentiality agreements, and we never openly discuss the fact that we have a particular business for sale in Auckland without having an NDA in place first. The last thing a vendor wants is their staff, customers, and competitors knowing they are for sale. It has to be hush-hush.

Normally, we do a staged release of information. We start with a preliminary information document that gives a good, holistic overview of the business. It is enough information for a buyer to understand whether it fits their acquisition criteria.

From there, it is about the buyer asking for more specific information to work out what the business is worth to them. Some of that more sensitive information can be dangerous in the wrong hands, so we work closely with our vendors to establish where the risk is in handing over certain details. 

Together, we try to stage the flow so the buyer gets what they need, while also justifying their genuine intent for accessing that information. Intellectual property and the core metrics of a business must not be shared carelessly, and that is something experienced business brokers in Auckland take very seriously.

We make sure we have a firm grasp on what we’re selling. Absolute, total, clarity, we measure three times and cut once. If you don’t do that as a business broker, you waste everyone’s time. Every deal we do has an accountant and a lawyer working independently for both the buyer and the seller. Deals don’t get done if they don’t make sense to the professionals involved. A good business broker will ensure the opportunity has good commercial logic before it hits the market. That means a lot less stress for the business seller.

The short answer to that is no. We’ve got buyers lined up to buy businesses in just about every industry sector you can think of, so we tend to focus on businesses that are profitable, with a bright future, and a vendor that’s getting out for the right reasons, like retirement.