2024 shaping up as a big year for commercial business sales, experts predict

“We’re seeing some interesting trends emerging in the next six to 12 months,” said Farzin Hesari, CEO of LINK Business Brokers Australia. “The biggest one is succession planning and business owners in their mid to late 50s and early 60s planning their retirement.

“We’re talking some amazing legacy family businesses all around Australia and they’ll be hitting the market in the next 12, 24 or 36 months. These might have an enterprise value from $1 million to over $50 million but it’s going to be a very exciting time.”

There will be some exciting challenges in this space, however, believes Matthew Newton, head broker at Bonza Business and Franchise Sales. “There’ll be a large influx of Baby Boomers planning to retire and selling their businesses to a younger generation who see value differently. They’ll have to bridge that gap.”

Another big mover in the market will be tourism and accommodation businesses, believes Kevin Lee, director of First Choice Business Brokers. While many had a tough time during COVID-19, they’re swinging back healthily into the black.

“The market is really improving now that there aren’t any restrictions anymore,” Lee said. “It had been so challenging and then there were staff shortages and other difficulties. But it’s improving steadily, and operators are a lot more confident.”

That tends to cover the whole gamut of accommodation providers, from caravan parks to top-of-the-range hotels.

“They’re doing well, particularly if they’re in a good location, in a destination people want to visit, like by a beach,” Lee said. “They’re earning a good regular income for their business owners.”

The trend of Australians taking holidays closer to home, with the weak Australian dollar and the rising cost of living affecting savings for overseas travel, will also boost the domestic industry.

Hospitality food and beverage concerns face a more uncertain year, however, says Hesari. Rising rents, electricity prices and wages have put a bit of a squeeze on operators, who often see margins shrink – unless they can pass on the higher costs to their customers. With discretionary spending falling among Australians, that could be tough.

“Some businesses may be struggling at the moment,” said Hesari. “As a result, we’re going to see some consolidation in the market, so buyers could be spoilt for choice. We’ll see operators coming together to buy each other out, create economies of scale, and absorb costs.

“But hospitality is difficult with Insta and social media meaning lifestyle crazes – like fashions in cafes and restaurants – now last just two years, where it used to be seven. That can be a tight cycle to a peak.”

Services industries, like accounting, legal, financial and commercial cleaning, will do well; however, Hesari forecasts. With everyone so time-poor, there’ll be a continuous demand for services, although AI might change that in three to five years.

Petrol stations will also continue to thrive, although some may be forced to diversify, for instance, offering EV-charging to make up for any shortfall in demand for petrol, Hesari believes.

Lee agrees. “They will be strong, and receive good income, especially in good locations,” he said. “We have a lot of Indian and Chinese buyers at the moment who want to start a business, as they’d like to have a family business.”

Childcare will be another strong performer, according to Lee. “They did very well in 2023 and they will do pretty well again in 2024,” he said.

Newton says many more people in 2024 are also likely to buy – and sell – businesses using vendor finance. In 2022, that accounted for only about 5 to 10 per cent of sales. In 2023, that proportion increased exponentially, almost doubling.

“And I think that will rise again in 2024,” Newton said. “If you’re selling a business for $200,000, I might give you $120,000 and pay off the other $80,000 over the next 12-18 months. That means you’re borrowing from me rather than a bank which is growing in popularity and is a valuable tool for both the buyer and seller. It can be mutually beneficial.”

He sees a possible rise in the popularity of non-qualified commercial businesses, too, for instance, powder coating, where you don’t need to be in a trade for six years to be able to offer the service.