What are the Most Attractive Sectors for Business Valuation and Company Sale?

Under any economic conditions, some sectors will see businesses that are quicker to sell than others. Of course, a business sector that is seeing universal decline will often not attract sufficient people who have the capital and taste for investment risk that will see a turnaround.

However, even in high-performing sectors of the economy selling some types of businesses can seem sluggish. For example, some retail concerns can be slower to sell than other sorts of company, even if they are established and have healthy balance sheets, because of investors’ concerns over things like landlords’ rental prices, tenancy duration and direct competition. On the other hand, some sectors of the economy are particularly fast to sell, but which ones are they?

Computing and IT

Few investors would predict a decline in this sector in the years ahead, making for a sound place to put their capital. The return on investment in the sector is viewed as strong, even if the new owner puts little energy into the business that has been acquired. Indeed, some people buy equity in computing and IT businesses simply because they think that a third-party buy out or merger will be likely in the years to come as the sector starts to coalesce.

Computing and IT encompasses a wide number of business, not just firms which supply technology and equipment. In fact, it is knowledge and specialist skills which are often seen as the thing most worth investing in. When marketing a business in this sector, it is well worth highlighting areas of expertise.

Recruitment

The recruitment sector is also a specialist one. Investors see specialist recruitment firms as a good bet for a potential buy out because of the scalability. Successful recruiters often come to the notice of potential clients in the same sector, for example legal recruitment or companies that recruit for the road haulage industry. Any firm that is deemed to be ‘on the up’ is likely to be scalable to new heights.

As recruitment companies tend to be formed as start-ups by professionals who began working for themselves, the potential for growth can be huge – something that keeps sales in the recruitment business sector buoyant.

Healthcare

It is a well-established fact that with an ageing population in the West that the demands made of the healthcare sector is only going to grow and grow, making for a superb return for investment given the right company. Healthcare companies that provide direct patient care are often considered highly scalable for this reason.

Any pharmaceutical company or medical research business is also a prime investment target for many, due to the intellectual property rights that such companies can offer, often suggesting long-term profits given the right sort of marketing investment. However, as the number of products launched successfully are vastly outweighed by the number which don’t complete their development, it will always represent a high risk endeavour.

Technology

technology sector, new ideas are always being developed and picking the right one is the key to success for many venture capitalists. Securing these ideas and patents is why many investors look to purchase start-up technology companies, even if the brains behind those inventions are left in situ to develop them fully.

Like the recruitment sector, relatively new businesses tend to be the most attractive for selling, but technology companies of all kinds engender interest, especially those focused on hot areas, such as clean energy technology and new media.

Telecoms

Since the telecoms sector in the UK was de-nationalised, the industry has seen much activity from mergers and acquisitions. The sector is just as vibrant today with many businesses being bought each year from investors who predict that they will be able to gain good levels of return, if they can manage to upscale the business. Well-run firms with limited marketing budgets tend to be the most attractive, since these have the greatest potential for gaining market share, but all sorts of companies are ripe for purchase, from mobile operators to suppliers of telecoms equipment.

Conclusion

Although the aforementioned business sectors are, on average, more likely to sell quickly and with higher multiples, the sector a business is in is one of many different aspects buyers look at. A well-managed business with a healthy track record and margins is still an attractive investment, regardless of industry.

Given all businesses take a while to sell, you should be seeking to maximise the saleability of your company and that work can start now. We offer a free industry report called ‘9 Ways to Increase Your Business Sale Value’ which is available to all who register on this website or contact us.

Or, if you just want some free confidential advice on the phone, please call 0333 050 8225 and speak to the team.