Low business confidence isn’t stopping entrepreneurs from buying and selling businesses across New Zealand at levels one industry insider describes as “unprecedented”.
“I’ve never seen such activity in my career,” says Nathan Miglani of NZ Mortgages. “I am seeing unprecedented surge in the buying and selling of businesses across the country, signaling a newfound vibrancy in the local economy.”
The surge would seem counterintuitive, given the first quarter this year ended on a sombre note with economic indicators suggesting a drop in business confidence. But Nathan says established enterprises are capitalising on current market conditions by either acquiring new ventures or divesting to pursue fresh opportunities.
“Despite prevailing uncertainties, businesses are navigating challenges with a strategic mindset, leveraging available resources to drive growth and expansion initiatives.”
A key driver behind this surge in business activity, Nathan explains, is the abundance of labour in the market. During the challenging years of the Covid-19 pandemic, many businesses shut down as a result of border closures and the subsequent halt in the influx of overseas workers.
But with migration to New Zealand now at record levels after borders reopened, the landscape has undergone a significant transformation. Labour shortage has eased, leading to a more favourable operating environment for businesses and a reduction in operational costs.
“I remember during the pandemic, a leading restaurant brand had to sell an outlet at half the price within months of opening. It just couldn’t deal with the labour shortage. But now the market has turned on its head, there’s plenty labour and opportunities.”
Hemant Gupta, an Auckland-based business broker at Clyth Macleod Business Sales, is also reporting a surge in business activity, particularly among the Kiwi-Indian community.
“Currently, we're experiencing an unprecedented surge in buyer inquiries, with a steady stream of interest pouring in weekly. Our pipeline for under-contract businesses is at the highest it’s ever been for our company, indicating a strong market.
“Indication is, 80 per cent of our prospective buyers in our food and hospitality, distribution and laundromats are from India, a trend attributed to the influx of immigrants seeking opportunities in New Zealand,” he says.
Hemant says new buyers are stepping in with confidence, ready to infuse fresh ideas and energy into their ventures. The flurry of activity is driving an uptick also for the entire business buying and selling ecosystem, especially commercial financing that Nathan points out is completely different from the home loan market.
“Banks typically lend to businesses against one of two collaterals–equity in either a residential or commercial property, or against cash flow projections. That’s where it becomes tricky because you need to have knowledge of running a business, including cash flows, financials and lease agreements,” says Nathan.
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