Wholesale investor national survey March 2010 – reveals strong growth

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Wholesale investor national survey March 2010 – reveals strong growth in


Wholesale investor national survey March 2010 – reveals strong growth in

By , April 25, 2010

The recently released Wholesale Investor National Investor Survey for the March Quarter 2010 reveals some interesting trends and growth in the desire for quality private businesses for sophisticated investors.

The survey was conducted on a database of 5,450 investors 66.3 % of whom have a net wealth of over $1M and 25.3% over $5M. 48.4 % of these investors have a portfolio valued at between $500k and $10M. This market has “re-invested” quickly with less than 21.2 % having 50 % or more of their funds in cash compared with 79% in May 2009. Interestingly, 94.8 % believe this is a good time to invest and 23.2 % believe this is the “best time I have ever experienced. “

There is a large opportunity for well organised SME owners with compiled due diligence files and the “house in order ” to take advantage of this increase in buyer interest – the vast majority of this market is looking for quality private businesses with a strategic plan and a well structured business not dependent upon the owner / founder . 68.4 % were looking for investment into private companies. 81.1 % are looking to hold direct equity into a private company – but this market is unforgiving!

The survey also revealed that 64.2% of investors review between 10 and 30 opportunities before they invest in one and 60 % are currently invested in 3 or more investments. The survey stated that most SME’s in building a succession plan fail in the areas of ( in order ):

Valuation too optimistic
Financial projectsions too optimistic
Lack of management expertise
No defined exit strategy

This is entirely consistent with our experience with new clients – and unfortunately you only get one chance at making this exit option work – if your business exit or succession plan is to sell into this market as part of an ownership transition then you better get the issues highlighted above sorted and documented clearly.

Craig West

Craig West

Managing Director | Succession Plus

Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners. Following 6 years of study to gain two masters degrees, Craig focused on Capital Gains Tax (CGT) for business sales advising on strategic management of tax issues. This experience formed a very strong view that business owners (and often their advisers) were unprepared and unaware of the steps required to prepare a business for exit.

Craig now acts as a strategic mentor for mid-market business owners and has written four critically acclaimed books on employee incentives, succession planning, asset protection and exit strategies. Craig has conducted numerous seminars and keynote presentations throughout Australia & internationally, including adviser education programs for the Institute of Chartered Accountants and CPA Australia.