Future Maintainable Earnings

“Interesting times” is most probably a catch phrase many are sick of hearing and in the Business Broking world the degrees of opportunity are now many and varied, but our common catchphrase is Future Maintainable Earnings.

It’s now the end of May whilst writing this piece and I say that as forecasts change almost on a daily basis.

We had the fortune in having the Chief Economist of a leading trading bank giving us his view of the economy and NZ’s current situation as he saw it, quite an interesting an insightful discussion.

In his view, forecasts in this New World we live in are all theory until they unravel a day at a time, the suggestion being to focus not on the global  numbers that affect us nationally as such in “general terms”, but more on the story that is relevant to each specific business opportunity.

He believes the economy will contract between 15 to 25% over the second quarter, the potential for this to be greater has been countered by the Government and Central Banks ability to act swiftly in applying the right degree of assistance with the initial financial packages released.

What are we seeing at the coal face? Its early days, but it’s all about Future Maintainable Earnings; if the business has the ability to trade in this Covid environment, within reason, it should be able to achieve what it has in previous financial years. This is especially true of businesses that operate on a recurring revenue model.

I am meeting vendors who were interested in selling prior to lockdown, realising that the environment has changed but who still have a desire to move their businesses on. This includes assisting with long-term planning for a sale in a couple of years.

I am also meeting buyers who were interested in buying prior to lockdown, realising that the environment has changed and who are now needing to take a mid to long term approach of any opportunity in order to make a purchasing decision. 

As the Chief Economist said, it’s all about the specific story around each business.

I’d love to hear your story!