snapshot of past 10 business sales, nick lucas, bayleys, dunedin nz

Nick Lucas - Last 10 SalesBUSINESS ID/ TYPE

SALE FORMAT

APPRAISED MP/

LIST PRICEADVERTISNGMETHOD & INVESTMENT

TIME ON MARKET

NUMBER OFFERS

MEDIA SOURCE

LOCATION OF OFFERS

FIRST OFFER / SALE PRICE

SALE PRICE

NEGOTIATIONDIFF $ / %

LIST PRICE/SALE PRICEDIFF $ / %

A: Lunch Bar

• For Sale• Priced• Named

110,000/ 110,000

InternetP. Press $980

28 Days 5Multi Offer

Buyer list (2)OnlineProperty Press*

Dunedin 3, Otago Invercargill

130,000 130,500$5000.4%

$20,500 18.6%

B: Service

• Deadline• 10 Days• Named

300,000/ 310,000

PrintOnline Blitz $1,000


Online (2)*Buyer ListProperty Press

Dunedin 3, C.Otago, Chch 320,000 325,000

$5,0001.6%

$15,000 4.8%

C: Bar/ Café


150,000/ 150,000


50 Days 1 Newspaper Auckland 130,000 149,500$19,50015.0%

-$500 -0.3%

D: Lunch Bar


72,500/ 75,000

Internet Only $400 10 Days 4

Multi OfferTrademeBuyer List (3)*

Dunedin 2, South Otago, N. Otago

72,500 72,500$0

0.0%-$2,500

-3.3%

E: Manufacturer

• For Sale• Priced• Anon

230,000/ 230,000

NilBroker intro only $0

80 Days*500 days with 3 prev. agents

1 Buyer list E.Otago 170,000 210,000$40,00023.5%

-$20,000 -8.7%

F: Construction


600,000/ 675,000


100 Days*200 days with prev. agent

1 Buyer list Central Otago 520,000 580,000$60,00011.5%

-$95,000 -14.1%

G: Manufacturer

• For Sale,• Range• Anon

910,000/ 1,100,000


62 Days 2 Buyer list Dunedin, Wellington 700,000 900,000

$200,00028.6%

-$200,000 -18.2%

H: Joinery


125,000/ 170,000

Internet $200 380 Days 1 Trademe South Otago 110,000 130,000

$20,00018.2%

-$40,000 -23.5%

I: Café/ Bar


375,000/ 499,000

Internet $300


1 Buyer list Dunedin 300,000 370,000$70,00023.3%

-$129,000 -25.9%

J: Wholesaler


210,000/ 270,000

Internet $100

192 Days*accounts update deteriorated

1 Targeted Buyer Dunedin 125,000 155,000$30,00024.0%

-$115,000 -42.6%

Average308,250/358,900

257,750 302,250$44,50017.3%

-$56,650 -15.8%

Listing Strategy/ Decisions >> >> Implementing Strategy/ Sales Process >> >> >> Strategy Outcome/ Sale Results >> >>

1

1. Price it Right • On average an accurate price will require less sale time, attract more interest and offers and sell closer to expectations.• Look also at the average difference between appraisal midpoint and average sale price

BUSINESS ID/ TYPE

SALE FORMAT

APPRAISED MP/


TIME ON MARKET

NUMBER OFFERS

MEDIA SOURCE

LOCATION OF OFFERS


SALE PRICE



A: Lunch Bar


110,000/ 110,000





130,000 130,500$5000.4%

$20,500 18.6%

B: Service


300,000/ 310,000





$5,0001.6%

$15,000 4.8%

C: Bar/ Café


150,000/ 150,000



-$500 -0.3%

D: Lunch Bar


72,500/ 75,000




72,500 72,500$0

0.0%-$2,500

-3.3%

E: Manufacturer


230,000/ 230,000




-$20,000 -8.7%

F: Construction


600,000/ 675,000




-$95,000 -14.1%

G: Manufacturer


910,000/ 1,100,000



$200,00028.6%

-$200,000 -18.2%

H: Joinery


125,000/ 170,000


$20,00018.2%

-$40,000 -23.5%

I: Café/ Bar


375,000/ 499,000

Internet $300



-$129,000 -25.9%

J: Wholesaler


210,000/ 270,000

Internet $100



-$115,000 -42.6%

Average308,250/358,900

257,750 302,250$44,50017.3%

-$56,650 -15.8%


1

Vs.

Broker Appraisal Midpoint/ Vendor Instructed List Price

1. Price it Right –When the price is overly high…• Why risk the sale of your business by over pricing? • Sales below suggest pricing above the market could result in lower sale price than had it been accurately priced initially• Sale J shows an example when the vendor runs out of choices…

BUSINESS ID/ TYPE

SALE FORMAT

APPRAISED MP/


TIME ON MARKET

NUMBER OFFERS

MEDIA SOURCE

LOCATION OF OFFERS


SALE PRICE



A: Lunch Bar


110,000/ 110,000





130,000 130,500$5000.4%

$20,500 18.6%

B: Service


300,000/ 310,000





$5,0001.6%

$15,000 4.8%

C: Bar/ Café


150,000/ 150,000



-$500 -0.3%

D: Lunch Bar


72,500/ 75,000




72,500 72,500$0

0.0%-$2,500

-3.3%

E: Manufacturer


230,000/ 230,000




-$20,000 -8.7%

F: Construction


600,000/ 675,000




-$95,000 -14.1%

G: Manufacturer


910,000/ 1,100,000



$200,00028.6%

-$200,000 -18.2%

H: Joinery


125,000/ 170,000


$20,00018.2%

-$40,000 -23.5%

I: Café/ Bar


375,000/ 499,000

Internet $300



-$129,000 -25.9%

J: Wholesaler


210,000/ 270,000

Internet $100



-$115,000 -42.6%

Average308,250/358,900

257,750 302,250$44,50017.3%

-$56,650 -15.8%


1

2. Advertise: Expose yourself to buyers • A proper advertising strategy will on average reduce sale time attract more offers and net a better Sale Price.• More offers give more options: It’s the difference between being price setter (above) and a price taker (below)

BUSINESS ID/ TYPE

SALE FORMAT

APPRAISED MP/


TIME ON MARKET

NUMBER OFFERS

MEDIA SOURCE

LOCATION OF OFFERS


SALE PRICE



A: Lunch Bar


110,000/ 110,000





130,000 130,500$5000.4%

$20,500 18.6%

B: Service


300,000/ 310,000





$5,0001.6%

$15,000 4.8%

C: Bar/ Café


150,000/ 150,000



-$500 -0.3%

D: Lunch Bar


72,500/ 75,000




72,500 72,500$0

0.0%-$2,500

-3.3%

E: Manufacturer


230,000/ 230,000




-$20,000 -8.7%

F: Construction


600,000/ 675,000




-$95,000 -14.1%

G: Manufacturer


910,000/ 1,100,000



$200,00028.6%

-$200,000 -18.2%

H: Joinery


125,000/ 170,000


$20,00018.2%

-$40,000 -23.5%

I: Café/ Bar


375,000/ 499,000

Internet $300



-$129,000 -25.9%

J: Wholesaler


210,000/ 270,000

Internet $100



-$115,000 -42.6%

Average308,250/358,900

257,750 302,250$44,50017.3%

-$56,650 -15.8%


1

Vs.

2. Advertise: Many Sources/ Locations of Buyers• There may only be one buyer for a business and only one way to reach them• There may be many potential buyers and reaching them gives the opportunity to create competition for ownership• About 50% sales are to purchasers known to the broker -though relying solely on a broker may not be in your best interest

BUSINESS ID/ TYPE

SALE FORMAT

APPRAISED MP/


TIME ON MARKET

NUMBER OFFERS

MEDIA SOURCE

LOCATION OF OFFERS


SALE PRICE



A: Lunch Bar


110,000/ 110,000





130,000 130,500$5000.4%

$20,500 18.6%

B: Service


300,000/ 310,000





$5,0001.6%

$15,000 4.8%

C: Bar/ Café


150,000/ 150,000



-$500 -0.3%

D: Lunch Bar


72,500/ 75,000




72,500 72,500$0

0.0%-$2,500

-3.3%

E: Manufacturer


230,000/ 230,000




-$20,000 -8.7%

F: Construction


600,000/ 675,000




-$95,000 -14.1%

G: Manufacturer


910,000/ 1,100,000



$200,00028.6%

-$200,000 -18.2%

H: Joinery


125,000/ 170,000


$20,00018.2%

-$40,000 -23.5%

I: Café/ Bar


375,000/ 499,000

Internet $300



-$129,000 -25.9%

J: Wholesaler


210,000/ 270,000

Internet $100



-$115,000 -42.6%

Average308,250/358,900

257,750 302,250$44,50017.3%

-$56,650 -15.8%


1

3. The Power of Negotiation – Where the broker adds you value• The ability to get the offer when there is only one (or few) buyers• The ability to make the deal and bring buyers up

BUSINESS ID/ TYPE

SALE FORMAT

APPRAISED MP/


TIME ON MARKET

NUMBER OFFERS

MEDIA SOURCE

LOCATION OF OFFERS


SALE PRICE



A: Lunch Bar


110,000/ 110,000





130,000 130,500$5000.4%

$20,500 18.6%

B: Service


300,000/ 310,000





$5,0001.6%

$15,000 4.8%

C: Bar/ Café


150,000/ 150,000



-$500 -0.3%

D: Lunch Bar


72,500/ 75,000




72,500 72,500$0

0.0%-$2,500

-3.3%

E: Manufacturer


230,000/ 230,000




-$20,000 -8.7%

F: Construction


600,000/ 675,000




-$95,000 -14.1%

G: Manufacturer


910,000/ 1,100,000



$200,00028.6%

-$200,000 -18.2%

H: Joinery


125,000/ 170,000


$20,00018.2%

-$40,000 -23.5%

I: Café/ Bar


375,000/ 499,000

Internet $300



-$129,000 -25.9%

J: Wholesaler


210,000/ 270,000

Internet $100



-$115,000 -42.6%

Average308,250/358,900

257,750 302,250$44,50017.3%

-$56,650 -15.8%


1

3. The Power of Negotiation – Where the broker adds you valueThe limited need for negotiation when you plan your sale well and create competition for your business.

BUSINESS ID/ TYPE

SALE FORMAT

APPRAISED MP/


TIME ON MARKET

NUMBER OFFERS

MEDIA SOURCE

LOCATION OF OFFERS


SALE PRICE



A: Lunch Bar


110,000/ 110,000





130,000 130,500$5000.4%

$20,500 18.6%

B: Service


300,000/ 310,000





$5,0001.6%

$15,000 4.8%

C: Bar/ Café


150,000/ 150,000



-$500 -0.3%

D: Lunch Bar


72,500/ 75,000




72,500 72,500$0

0.0%-$2,500

-3.3%

E: Manufacturer


230,000/ 230,000




-$20,000 -8.7%

F: Construction


600,000/ 675,000




-$95,000 -14.1%

G: Manufacturer


910,000/ 1,100,000



$200,00028.6%

-$200,000 -18.2%

H: Joinery


125,000/ 170,000


$20,00018.2%

-$40,000 -23.5%

I: Café/ Bar


375,000/ 499,000

Internet $300



-$129,000 -25.9%

J: Wholesaler


210,000/ 270,000

Internet $100



-$115,000 -42.6%

Average308,250/358,900

257,750 302,250$44,50017.3%

-$56,650 -15.8%


1

4. Other Factors – Name it & Price it While not always possible, named business attract 30% more enquiry and priced business attract a further 40% more enquiry.

BUSINESS ID/ TYPE

SALE FORMAT

APPRAISED MP/


TIME ON MARKET

NUMBER OFFERS

MEDIA SOURCE

LOCATION OF OFFERS


SALE PRICE



A: Lunch Bar


110,000/ 110,000





130,000 130,500$5000.4%

$20,500 18.6%

B: Service


300,000/ 310,000





$5,0001.6%

$15,000 4.8%

C: Bar/ Café


150,000/ 150,000



-$500 -0.3%

D: Lunch Bar


72,500/ 75,000




72,500 72,500$0

0.0%-$2,500

-3.3%

E: Manufacturer


230,000/ 230,000




-$20,000 -8.7%

F: Construction


600,000/ 675,000




-$95,000 -14.1%

G: Manufacturer


910,000/ 1,100,000



$200,00028.6%

-$200,000 -18.2%

H: Joinery


125,000/ 170,000


$20,00018.2%

-$40,000 -23.5%

I: Café/ Bar


375,000/ 499,000

Internet $300



-$129,000 -25.9%

J: Wholesaler


210,000/ 270,000

Internet $100



-$115,000 -42.6%

Average308,250/358,900

257,750 302,250$44,50017.3%

-$56,650 -15.8%


1

4. Other Factors – Time on the marketOn average a business sale price is 3% less for each 100 days on the market.

BUSINESS ID/ TYPE

SALE FORMAT

APPRAISED MP/


TIME ON MARKET

NUMBER OFFERS

MEDIA SOURCE

LOCATION OF OFFERS


SALE PRICE



A: Lunch Bar


110,000/ 110,000





130,000 130,500$5000.4%

$20,500 18.6%

B: Service


300,000/ 310,000





$5,0001.6%

$15,000 4.8%

C: Bar/ Café


150,000/ 150,000



-$500 -0.3%

D: Lunch Bar


72,500/ 75,000




72,500 72,500$0

0.0%-$2,500

-3.3%

E: Manufacturer


230,000/ 230,000




-$20,000 -8.7%

F: Construction


600,000/ 675,000




-$95,000 -14.1%

G: Manufacturer


910,000/ 1,100,000



$200,00028.6%

-$200,000 -18.2%

H: Joinery


125,000/ 170,000


$20,00018.2%

-$40,000 -23.5%

I: Café/ Bar


375,000/ 499,000

Internet $300



-$129,000 -25.9%

J: Wholesaler


210,000/ 270,000

Internet $100



-$115,000 -42.6%

Average308,250/358,900

257,750 302,250$44,50017.3%

-$56,650 -15.8%


1

10

$$$PRICE IT RIGHT –There is a direct correlation between an overly ambitious listing price (compared to appraisal midpoint) and a less favourable final sale price. In other words pricing your business too high will not achieve as good a result as accurately pricing your business. Priced incorrectly your business will sit for longer, the market will observe the lack of demand and price it accordingly. As well, a vendor is more likely to be disillusioned by the process.

1.9%Use the appraisal and advice from your broker. The average difference between the appraisal midpoint and final sale price of the last ten businesses sold was 1.9%.A broker works for the vendor and may list a business higher on their instruction. Remember though, they are professionals providing you current market advice for the sale of your business.

13Bayleys commonly use over 13 different media types to attract buyers. This includes both public and agent exclusive options: online, print, direct approaches, social media and buyers already known to the broker. Of the ten sales, offers came from 8 different media sources. Genuine enquiry was received from every source.Importantly many of the enquiries and offers received have come from what we see as in-active buyer sources. That is buyers who weren't specifically looking for a business but, having seen it, have advanced an enquiry about a potential opportunity.At the beginning of a business sale it is never known where the buyer will come from but what we do know is that with exposure comes more interest and competition for ownership.

50%Of the last ten sales, over half the successful purchasers have previously been known and introduced by the broker. A broker’s network is an important tool brought to a sale providing some level of confidence -especially when the business may only attract a small number of enquirers -but it is not a complete answer: When there is a distressed sale or there is an absence of buyer competition for ownership, business owners are price takers.

A majority of buyers are local –but vital enquiry comes from around NZ and overseas. Many factors including a business type and scale will determine the ideal marketing strategy and focus.

1:5

Advertising Investment -The graph below shows the dollar difference between the actual sale price and the initial asking price vs. the dollar amount of advertising investment undertaken.

As a general rule I believe businesses should invest between 0.5% and 1.0% of the value of their business in advertising and marketing when selling their business. Based on the observed results from the last ten sales, for every $1 (deductible) invested promoting the business sale, the sale result improved by over $5 (capital gain).There are strategies to promote businesses with every set of circumstances including when discretion is required around the business identity. Be very careful though, do not short change your business sale by not advertising.

17.3 Power of Negotiation –the average increase we have achieved from a first offer to final sale price is 17.3%. Looking closer, when removing the multi offers (where competition for ownership should extract higher first offers) we have achieved over 20% increase.

100The first 100 days on the market are the most vital for business owner’s to achieve a sale outcome matching their price expectations. On average for every 100 days a business is on the market the difference between the sale price and the listed price reduces by 3%. After a year your business is worth 11% less. Be prepared, price it right and strike while the iron is hot!

FROM THE NUMBERS: Key points of interest

snapshot of past 10 business sales, nick lucas, bayleys, dunedin nz

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