Business for sale: Ukrainian market review | Sale of business

So is today: on a background of crisis in the most dynamic some time ago auto and real estate markets, middle/small -size business sale and purchasing activity becomes more and more popular.

Why business is selling now?

We will be frank: foremost for a crisis. Today some owners do it in a hope in time (as them it seems to) pull out their money from facilities and than wait for the best times on a sack with the cash. More far-sighted (and more numerous) businessmen try to manoeuvre with money, withdrawing them from industries, less attractive on the initial stage of crisis and inlaying them in more advantageous business. Enterprises, offered for sale by them are mostly in obviously state and could be purchased at low enough price.

Other businessmen realize, that business niche, so comfortable for them recently, suddenly become inconvenient, because does not cover a cost expenses of work in new terms. If you add to these circumstances a burden of «cheap» credits (especially in euro or dollars), taken once under very tempting interest rates, idea of going away from such business as quick as possible becomes really saving for them. So, at the market appear working enterprises, which has got a lot of problem because of changing situation.

Some owners only want to go away on rest and/or to get over from Ukraine in another country with more stable policy situation, higher living standards and at least predictable currency, allowing even to save their money. Such owners, as a rule, propose for sale fully successful businesses, the cost of which in the best times could be twice more than at the today`s market. And as an amount of businessmen, aspiring to combine care on rest with the change of permanent address in the period of crisis increases, then buyers get more wide choice of such enterprises.

And finally, the most important: in nowadays owners actively sell their business because of solvent demand for it. Even now, during a crisis, there are enough people which torments just one (but very tough question): where should I invest my cash?

The point is that for the last 2-3 month most enterprising of Ukrainians however succeeded in fishing more than 19 milliard of hryvnyas from their «frozen» deposits – almost 4 billions dollars in the costs of August-2008, thus lion`s share of these money, «rescued» from the banks consists exactly of dollar – so expensive today. Let`s add to it $1-1,5 billion, gushing to Ukraine after reduction of workings hands demand in Western Europe – and it will become obvious, that today in Ukraine has (so far!) sufficiently «free» money, proprietors of which looking for effective investment possibilities.

In present situation «living», working business, purchased at moderate price, can be the very useful variant of investments, the more so now – while his integrity and efficiency can be stored due to comparatively small money injections. And today such enterprises really could be founded in Ukraine.

What business is proposed for sale?

The first place (up to 32% of enterprises, proposed for sale in Ukraine) now belongs to retail networks of food and/or other commodities (including domestic chemistry retail), and also to their separate constituents (shops, retail tents, stalls etc.) The palm of championship among them belongs to the comparatively small (up to 400 sq. m. of sale area) grocery shops, which often are unable to compete with the bigger colleagues — networks of department stores — in withholding relatively low prices.

It does not mean, however, that this business activity finally lost its attractiveness — with further economic complications, accompanied by falling of the real incomes, most people will be deprived possibility to give up handsome sums for «wholesale» acquisitions in supermarkets and will return to small in amount and costs purchases in little shops, located near their houses.

Followings on popularity (up to 23%) are small enterprises, related to a building industry – small factories, which produce concrete constructions, blocks, bricks and other building materials, woodworking workshops, etc.

After overwhelming number of new buildings in Ukraine had been frozen, majority of such companies remained without orders, and only few of their proprietors still possess financial and organizational possibilities to redirect them of concomitant products, for example, for municipal or other «eternal» public needs — as it could liberty to do more capable investor, purchasing today such enterprise at reasonable price.

The third place (up to 12%) belongs to the car business (car sale grounds, repairing workshops, fuel stations, etc.). Majority of their owners could not wait any support from big car producing corporations and so have no hope to stay alive till the better times will come. According to numerous expert estimations, car market will come back to life already in 2010 — when the slump of car sale could be substantially slowed on a oil price decline background. Further this year the quantity of such enterprises for sale will grow up.

The sale propositions of entertaining & recreation business (caffe, restaurants, mini-hotels etc.) are represented by comparatively small (up to 9%) group. That could be easy explained: despite of obvious visitors declination, a crisis (due to New-year holidays and traditionally long Christmas vacations) so far did not strike seriously this sector of business. However in spring the amount of such enterprises, proposed for sale, can be doubled (at least) — so, till summer vacations many of them will change their owners.

Up to 8% of the market now have been presented by the different agricultural enterprises: vegetable-growers and cattle-breeder complexes, small factories on processing of agricultural products, etc. Till autumn-2009 the number of sale propositions could be increased (in 1,5-2 time), provoked by the already beginning fuel prices advance and credit complications.

Finally, up to 16% business sale propositions today are represented by the domestic consumer services (different agencies, pharmacies, vending, consulting, etc.) and also by small enterprises, related to high-tech (web-clubs, web-shops and so on). First of them will increase their market stake on 10-15% to the end this year, and the last, because of comparatively small maintenance expenses and remaining demand of their services, will not notedly increase amount of sale propositions.

How does the business sell?

Most widespread for other expensive property sale – searching for buyer by announcements in mass-media (newspapers, magazines, TV and radio) – in the case of business is not only ineffective but also unsafe. I is not a secret, that only the limited enough group from all mass of readers even in advanced editions will be oriented to the search in them variants of suitable business.

Any attempt to place the sale announcement in them will be regarded by potential buyers with nothing except dim suspicions, that they are foisted an enterprise which will go bankrupt if not today – than tomorrow. In the worst case buyer could think than somebody going to deceive him. In addition, to wide distribution of preliminary information about the fact of sale can bring a negative consequences (loss of suppliers, strengthening your competitors, and finally – getting into the notice of criminals).

The searching of possible buyers in internet could be a little more effective (placing messages at the proper forums and on the specialized sites). However even this way does not fully guarantee neither the personal safety for the owner, nor loss the information about a future transaction. Moreover, owner could not be ensured that he will get proper sum for his enterprise – according to specification and current status of this business and its position at the market. To say trues – he could get nothing in general, because of checking the degree of reliability of future partner is practically impossible today for lone person or even – for unspecialized company.

Lately Ukrainian business owners more frequently use business-broker`s services (financial advisers), which are not only helping them to find an optimum buyer, check up his business activity and make sure in his solvency, but also accompanying all transaction, up to the receipt the stipulated money by a salesman. In addition, financial advisers can render a considerable help even at the stage of preparation business for the sale (business estimation, independent audit, etc.) and, if necessary, will provide a transaction at the enhanceable level of confidentiality, sifting from "non-serious" and doubtful buyers during preliminary negotiations.

Business-brokers had already well recommended themself in the Western Europe and in nearby Russia, where over 65% small business sale/purchase operations are carried out with their help (in the middle-level business this index exceeds 80%). Experts mark that with deepening of economic crisis the role of financial advisers on a business-market will considerably increase: in the more difficult situation the time will be a key factor. And in the rational use of time vast client bases, wide connections in medias-space and business environment will play an important role – so, all that features distinguish nowadays every professional business-broker company.

However, while a crisis yet spinups only, small and middle-level Ukrainian business has time to think about acceptance of correct decision yet. What`s important to remember – deepening crisis, inevitably attended with further complications in work of enterprise, can result that business will begin to remind a heavy suitcase without a handle, content of which early or later will have to be sold out by installments and for cheap. So, «dying» or already «dead» business will leave off any interest for a potential buyer...