Business in Ukraine: it`s time to buy! | Sale of business

...— from 6-8 months to two-three years, but experts are unanimous – if economy convalescence is possible, it will be not bad to gain something in the widest range of business — if, certainly, to engage this business in time.

As for Ukraine, investors with pretty good sums of free money have got the wide choice of different industries and enterprises. Of course, their geography, assortment and price categories had been suffered by some curious changes for the last three-four months.

The bottom at the end of tunnel?

Last marketings researches, conducted by the InterCredit company specialists, witnessed that in some sectors of operating business the price bottom practically had been already attained. Moreover — as a result of big foreign investors coming into the Ukrainian market, the number of the proper enterprises, proposed for sale, slipped down as compared to beginning of year, and prices for remainings show the tendency to increasing.

So, for example, happened with the retail point-of-sale networks of food and/or other stuffs (including domestic chemistry), and also their separate constituents (shops, point-of-sale tents, stalls etc.). If at the end of January, 2009 the number of such sale propositions attained 32% on the market (first place on Ukraine!), by the end of April their amount went down to 26% and continues to slip down — main part of eхposed at the market had been already found the new owners or (more frequent) strategic investors, acquiring part share`s package of enterprise, and the quantity of the new sale propositions diminishes.

Notably: in winter for sale was proposed comparatively small shops (with a sale area up to 400 sq. m.) and nowadays the groups of more large enterprises (up to the networks of supermarkets and discounters) has appeared at the market. It`s need to be noted, that such retailers are mainly oriented for the partial sale.

In place of retailers the palm of championship at the Ukrainian market of operating business presently retain small production enterprises. Thus, if recently among them are prevailed the companies, related to a building industry – concrete, blocks and other building materials mini-factories, woodworking workshops etc., today this list was filled up by the processing enterprises of light, chemical and food industry. General stake of similar objects sale propositions grew from 23 to 29%.

As InterCredit predicted, sale propositions of autobusiness (sale grounds, maintenance workshops, autowashings, fuel stations, etc.) increased. Their owners, indisposed of support big autoproducers support, does not hope to stay afloat to the best times, which, in obedience to numerous expert estimations, have been expected an automarket in 2010 already — when on a background the saved tendency of oil price declination, the slump of autosales will be slowed substantially. Amount of similar sale propositions grown from 12% (January, 2009) up to to 14% on beginning of May.

As it had been forecasted, the number of service sphere enterprises proposed for sale also grows up (different sort of agencies, pharmacies, vending business, consulting etc). During last months their rows were filled up by considerable quantity of insurance and financial companies, incorporated in September-November, 2008. These enterprises had time to get all necessary licenses and other obligatory documents, but had now time for real work (not speaking about for earning anything) — because of crisis.

Presently their stake at the market reach up to 11%, but in the nearest two-three months it is possible to expect the further increasing of their number, with the relating price declination.

The amount of entertaining and recreation objects offered for sale— cafe, restaurants, mini-hotels and recreation bases – did not change (9,5%) practically since January. It should be noticed, that while in south-east, South (coast of Azov and Black seas, Crimea peninsula), and also in the Western regions of Ukraine (Carpathians) the increasing of similar sale propositions is insignificant, on East and in central part of the country it grew considerably. However, increasing of most claimed — seashore business-objects of this sector — it is possible to expect already in the second half of May, аs result of «May vacations» (April, 30 – May,10).

At former (8%) level left a number of the agricultural setting enterprises proposed for sale — vegetable-grower and stock-raising complexes, small agricultural processing factories, etc. As InterCredit had already marked, by the autumn of this year it`s possible to expect the considerable (in 1,5-2 times) increasing of sale propositions in this sector, what will be promoted by the fuel price advance beginning and complications with credits for their maintenance and development.

And, finally, about 2,5% business-objects for sale are related to high-tech (internet-clubs, internet-shops, etc.). Because of activation internet-business during a crisis and comparatively small expenses on maintenance these enterprises, considerable growth of similar propositions at the market could not be expected.

Geography and prices

For the past three months geography of operating business for sale did not suffer the special changes.

As well as recently, the great number (28%) such enterprises is for sale in Kiev and the Kiev region. A South-east ( 23%) and South (20%) Ukraine follow next. As in January, point-of-sale and recreation objects prevail in the South regions, and in industrial South-east the production constituent of small and middle business is presented traditionally strongly.

Nevertheless, as compared to beginning of year, the quantity of business for sale propositions added in western (15,6% instead of 13,8% in January) and in central regions of the country — 13,4% instead of 10,4%.

Prices are varied in a wide range, depending on the business orientation, region and economic situation of the enterprise. The last one is most difficult to set a constituent with the sufficient degree of objectivity. That`s why InterCredit specialists always recommend to conduct professional preselling verification and preparation. However, it is possible to talk for any reasonable price — if, certainly, You will have success to begin the negotiations process correctly and just in time.

The price records are still hold by large hotel complexes (for example 15 000 000$ in Krivoy Rog), and by the recreation bases of rest — in Crimea (for example, recreation complex in Nikolaevka — 13 750 000$). Mini-hotels and resort family type hostels in the south and western regions remains approximately in the equal starting price category: Sudak(Crimea) — 1 250 000$, Kirillovka (Azov sea) — 1 600 000$, Truskavets — 2 000 000$.
As for other objects, the InterCredit company specialists fixed the following price levels:

Production enterprises — from 50 000$ (mini-production of concrete blocks), to 7 500 000$ (bread-baking plant).

Retail business — from 4 500$ (booth at the market), to 37 500$ (sanitary engineering shop on the leased area with the supplying commodity).

Car business — from 55 000$ (franchaizing, maintenance station), to 1 900 000$ (business on transportation of commodity concrete).

Нigh-tech sphere — from 3 000-5 000$ (web-shop), to 370 000$ (equity participation in the mobile content production).

So, to date the operating business market in Ukraine still remains the market of buyer, but not the market of salesman. With one little «but» — not in all sectors already. So potential investors have to hurry — both with a search/study of advantageous propositions and final decision about acceptance of enterprise acquisition.

Specialist сomments...: "Potential investors, interested in acquisition of enterprises with brightly expressed seasonal character of work, activated in April. For example, they are interested in recreation business, enterprises for agricultural products processing and canning" — marks Tat`yana Borovskaya, chief of InterCredit company clients department.

"It is not surprisingly, because period, preceding the season beginning is most optimum for buyers, interested to get a revenues in the maximally compressed terms", — underlines T. Borovskaya.