A growing succession gap is creating acquisition opportunities for prepared buyers 

Australia’s small business landscape is approaching a significant transition. According to the Australian Small Business and Family Enterprise Ombudsman, nearly half of all small business owners are now over 50. In professional services – which includes real estate agencies – the numbers are even more pointed: NAB research found that 75% of professional services business owners expect to exit within ten years.  

Yet only around one in four has a formal succession plan in place. For buyers interested in purchasing a business, the gap between owners who intend to exit and those who are actually prepared for it could be an opportunity. 

Why unplanned exits favour buyers who are ready 

When a business owner exits without a succession plan, the process tends to move quickly. There is less time for a carefully managed sale, fewer competing buyers and more pressure on the seller to close the deal.  

For a prepared buyer, that dynamic can be an advantage. Many businesses coming to market may not have a queue of ready buyers, because most of your competitors are as underprepared as the seller. Agencies that have completed their preparation beforehand may be better positioned to respond quickly when opportunities arise, not the ones scrambling to get finance in order after a conversation has already started.  

What does it mean to be finance-ready? 

Being finance-ready before a deal is on the table is not just about having a rough sense of your budget. It means having a clear picture of several things at once.  

First, you need to understand your own valuation and equity position. If you already hold a rent roll or operate an agency, do you know what it’s worth and how much you can borrow against it? Lenders typically apply a multiplier to annual management income to calculate rent roll value, then apply a loan-to-value ratio (LVR) to determine borrowing capacity. Knowing where you stand before a deal appears gives you confidence when one does.  

Second, you need to know how goodwill and rent roll lending actually works in practice. Lenders assess rent roll acquisitions differently from standard commercial lending. They look at churn rates, management agreement quality, property concentration and the operational track record of the business. If you understand what your lender will want to see, you can present your position more effectively from the start.  

Finally, beyond the lending mechanics, a cashflow model that accounts for acquisition costs and any short-term revenue disruption is essential. Integration rarely runs perfectly, and demonstrating that you’ve modelled it and prepared for it financially may help strengthen your finance application and due diligence preparation.  

Timing matters 

Time-pressured sellers may not wait. A retiring principal who needs to close within three months is not going to hold a deal open while you work through your finance structure from scratch. Having done the groundwork means you may be better positioned to begin negotiations, with conditional approval already in hand.  

This is important because sellers are not always looking solely at price. Recent commentary from LINK business brokers suggests that deal certainty is a major consideration in business sales. Buyers who can demonstrate financial capacity, move quickly through due diligence and present a clear path to settlement are often viewed more favourably than buyers who still need to arrange finance or finalise their acquisition plans. 

It can also help demonstrate credibility. Sellers want to be confident that a deal will actually get done. Arriving at a conversation already knowing your borrowing capacity, your deposit or equity contribution and with a finance broker who knows the space changes how you’re perceived as a buyer.  

Working with a specialist broker before a deal emerges means those conversations with lenders have already happened. As succession-driven business sales are likely to increase in frequency over the coming years, preparation is the difference between being a buyer and watching an opportunity close. 

 

If you want to get your finance in order ahead of your next acquisition, the specialist brokers at Finance Advisory Co can help you navigate the lending process. Call Ben on 0426 236 007 or email ben@finad.com.au. 

Finance Advisory Co Pty Ltd (ABN 37 660 030 419) is a Credit Representative (CR No. 541104) of Connective Credit Services Pty Ltd (Australian Credit Licence 389328)  
The information in this article is general in nature and does not constitute personal advice. You should consider whether the information is appropriate to your needs and seek professional advice before making any decisions. All applications are subject to lender credit criteria, fees and charges.