6 Dec 2010

Company owners hold off selling

6:32 am on 6 December 2010

The patchy economic recovery and major events like the Canterbury earthquake and collapse of South Canterbury Finance have prompted business owners to think twice about putting their companies on the market.

The ASB's Succession Planning Monitor for the three months to the end of September shows the slow recovery during the third quarter has hit business owners.

The bank's Business Seller's index has dipped 10 points, to minus 75, which means that overall business owners do not think now's a good time to sell.

The index has slipped back to where it was this time last year.

Only 14% of owners say they are looking to sell within the next two years, and 78% indicate they will hold off putting their businesses on the market.

ASB chief executive of relationship banking Stewart McRobie says business owners are reluctant to sell, and many believe the value of their firms has fallen during the drawn-out economic recovery.

The survey shows a sharp spike in the number of owners who believe their business is worth less than $250,000, up from 26% in the previous quarter to 35% in the three months to September.

The number of people who think their business is worth half a million dollars or less has also risen 5%, to 58% in the latest quarter.

Of the business owners planning to sell, 55% plan to sell to an external buyer, 29% will seek an unidentified buyer, and 26% plan to sell to a buyer outside the business.