At Broker.com.au, our Corporate Finance Division has been very active over the past 12-18 months in the business acquisition space. Helping entrepreneurs get debt funding to help them acquire businesses.
This is our first article in a 3-part series that highlights some of the pro’s and con’s of acquiring businesses, predominantly from a financing aspect.
Buying an already established business can really fast track business success. And we are here to help guide entrepreneurs through the financing process.
Australia is on the cusp of one of the largest intergenerational transfers of small and medium-sized enterprises (SMEs) in its history.
Across the country, thousands of business owners are approaching – or well past – retirement age. Many built their companies from scratch in the 1980s, 1990s and early 2000s. They’ve weathered recessions, regulatory reform, digital transformation, and most recently a global pandemic.
But today, a growing number face a difficult reality:
They have no succession plan.
No family successor.
No internal management ready to buy them out.
No structured exit strategy.
As a result, a significant proportion of Australian businesses are now being prepared for sale — creating both economic risk and generational opportunity.
This demographic shift is reshaping the business-for-sale market and creating major demand for acquisition finance solutions. For well-prepared buyers, this is one of the most compelling acquisition environments in decades.
The Demographic Time Bomb: Business Owners Over 60
Australia has approximately 2.5 million actively trading businesses, according to the Australian Bureau of Statistics (ABS). The overwhelming majority — more than 97% — are small businesses employing fewer than 20 people.
What’s more telling is who owns them.
Data from the ABS and small business surveys consistently show that:
- Around 35–40% of Australian small business owners are aged 55 or older
- Roughly 20–25% are aged 60 or older
- The fastest-growing cohort of business owners is aged 65+
This means hundreds of thousands of businesses are controlled by owners who are at or beyond traditional retirement age.
Unlike previous generations, many of these owners do not have children willing or able to take over the family enterprise. Cultural shifts, urban migration, higher education pathways, and lifestyle preferences have significantly reduced intergenerational succession rates.
In fact, industry research suggests fewer than 30% of family businesses successfully transition to the second generation. By the third generation, that number falls below 15%.
For a large portion of Australian SMEs, there simply is no internal successor.
The result? A surge in businesses heading to market.
How Many Businesses Are Currently for Sale?
While precise real-time figures fluctuate, business-for-sale marketplaces such as Seek Business, AnyBusiness, and specialised brokerage networks consistently list tens of thousands of businesses nationally at any given time.
Estimates suggest:
- Between 80,000 and 120,000 Australian businesses are on the market in any given year
- A large percentage are owner-operated SMEs
- A growing share are being sold due to retirement rather than distress
Retirement is now one of the leading reasons cited for business sales in Australia.
Importantly, this is not a short-term trend. The structural demographic shift will likely persist for at least the next 10–15 years as baby boomer business owners continue to exit the market.
Why Many Owners Have No Succession Plan
Despite decades of planning their businesses’ growth, many owners have not planned their exit.
There are several reasons:
1. Overreliance on Family Succession
Historically, business owners assumed their children would step into leadership roles. Today, many children pursue corporate careers, different industries, or overseas opportunities.
2. Emotional Attachment
Owners often delay succession planning because the business forms part of their identity. Without a forced transition event, decisions get deferred.
3. Lack of Formal Governance
Many SMEs operate without structured boards, documented processes, or clear management hierarchies. This makes internal succession harder to execute.
4. Underprepared Financials
Some owners only begin “cleaning up” financial reporting when they decide to sell, rather than years in advance.
The result is reactive selling rather than strategic exit planning.
Which Sectors Are Most Active?
While ageing ownership spans every sector, certain industries are particularly exposed.
1. Trade & Construction Services
Builders, electricians, plumbers, civil contractors and trade-based SMEs represent a large portion of older-owned businesses. These are often highly profitable but heavily reliant on owner relationships and licences.
2. Manufacturing & Industrial
Many small-to-mid manufacturing businesses were founded in the 1980s and 1990s. Succession rates in manufacturing are historically low.
3. Transport & Logistics
Family-run freight operators, courier businesses and regional transport companies are increasingly coming to market.
4. Professional Services
Accounting, financial planning and specialist consulting firms face similar demographic transitions, although regulatory licensing adds complexity to succession.
5. Regional Businesses
Regional Australia is particularly impacted. In some areas, retiring owners struggle to find local buyers, creating both opportunity and risk to local economies.
The Economic Implications
The ageing-owner phenomenon has broad implications:
- Potential business closures if no buyer emerges
- Job losses in local communities
- Reduced economic productivity if viable businesses disappear
- Asset value erosion if too many businesses hit the market simultaneously
However, from another perspective, this is also one of the largest acquisition opportunities in Australian history.
Thousands of profitable, established businesses with real cash flow are available — often at reasonable multiples compared to start-up risk.
The Rise of the Acquisition Entrepreneur
In response, we’re seeing growth in what’s often called “entrepreneurship through acquisition.”
Rather than starting a business from scratch, buyers are:
- Acquiring established cash-flow businesses
- Leveraging vendor transition periods
- Using structured debt funding to improve equity returns
- Rolling up multiple businesses within a sector
These buyers include:
- Corporate professionals seeking independence
- Migrant entrepreneurs
- Trade managers buying out retiring owners
- Private investors building portfolios
- Existing SMEs pursuing bolt-on acquisitions
For many, buying an existing profitable business can reduce risk compared to a start-up.
But acquisition success depends heavily on finance structure.
Financing Business Acquisitions in Australia
One of the most common misconceptions among buyers is that banks won’t fund goodwill or business purchases.
In reality, well-structured acquisitions can absolutely attract debt funding — but only when the financial case is strong and properly presented.
Common Loan Structures for Business Acquisition
1. Secured Business Loans (With Property Security)
Where a buyer can offer residential or commercial property as security, lenders are often willing to fund:
- Purchase price
- Working capital
- Transaction costs
Loan-to-value ratios (LVRs) can range from 60–80% depending on strength of servicing and security.
This is often the most cost-effective structure.
2. Cash Flow (Unsecured or Partially Secured) Lending
Specialist lenders may assess:
- Historical EBITDA
- Recurring revenue
- Industry stability
- Customer concentration
- Management capability
These facilities may fund:
- 2–4x sustainable EBITDA (depending on risk profile)
Pricing is higher than secured property-backed facilities but can allow buyers without property assets to transact.
3. Vendor Finance
In retirement-driven sales, vendor finance is increasingly common.
The retiring owner may:
- Accept staged payments
- Leave a portion of the purchase price outstanding
- Earn interest on deferred balances
This aligns interests and reduces upfront capital requirements.
Some issues with vendor financing that can occur though, are:
- The purchase price is typically higher than if you source your own external funds. This is because the vendor is in part helping you finance the business acquisition and can therefore dictate terms more in their favour.
- Often if a vendor gets enough upfront, even though they are still expecting their vendor finance to be paid out, they might ‘check out’ mentally and not help too much with training you to take over the business
- If you have performance targets during the vendor finance period that are not met, you might lose the deposit you paid without clawback. Meaning you lose both the business and the funds you put in.
4. Earn-Out Structures
Where performance is uncertain, buyers and sellers may agree that:
- Part of the purchase price depends on future performance
- Payments are tied to revenue or EBITDA targets
This protects buyers and facilitates smoother transitions.
What Lenders Want to See
Acquisition finance approval depends on preparation.
Lenders typically assess:
- 3 years of financial statements
- Adjusted EBITDA (normalising owner add-backs)
- Customer diversification
- Forward contracts or recurring revenue
- Working capital needs
- Buyer experience
- Integration plan
- Debt service coverage ratio (DSCR)
A strong DSCR (typically >1.25x) is critical.
This is where professional advisory support becomes decisive.
Why Financial Modelling and Valuation Matter
Many acquisitions fail at the funding stage because buyers rely solely on the seller’s headline numbers.
At Broker.com.au, we take a structured approach:
1. Rebuilding the Financial Model
We reconstruct the financials to determine:
- True maintainable EBITDA
- Normalised working capital
- Sustainable cash flow
- Capital expenditure requirements
- Sensitivity under downside scenarios
2. Business Appraisal
We assess:
- Appropriate industry multiple
- Asset backing
- Risk profile
- Competitive positioning
- Transferability of goodwill
3. Funding Capacity Analysis
We determine:
- Maximum safe leverage
- Optimal debt structure
- Required equity contribution
- Sensitivity under interest rate changes
4. Lender Strategy
Not all lenders view business acquisitions equally.
We identify:
- Banks with appetite for the sector
- Non-bank lenders suited to the deal size
- Structuring opportunities to reduce pricing
- Ways to mitigate perceived risk
This dramatically increases approval probability.
The Strategic Advantage of Structured Debt
When acquisition finance is structured correctly:
- Buyers preserve capital
- Equity returns increase
- Risk is managed through modelling
- Working capital is protected
- Growth funding remains available
Without structure, buyers risk overpaying, undercapitalising, or breaching covenants.
A Historic Window of Opportunity
Australia’s ageing business owner wave is not a crisis — it is a structural transition.
For buyers:
- Valuations in some sectors remain attractive
- Motivated retirement sellers are realistic
- Vendor finance is more common
- Established cash-flow businesses reduce start-up risk
For sellers:
- Planning early improves exit outcomes
- Structured sales attract stronger buyers
- Pre-sale financial cleanup increases multiples
But both sides require professional advice.
How Broker.com.au Supports Business Acquirers
At Broker.com.au, we operate at the intersection of:
- Corporate finance
- Structured lending
- Financial modelling
- Commercial credit strategy
Our background in global investment banking and business finance allows us to approach SME acquisitions with institutional-grade discipline.
We assist clients with:
- Acquisition feasibility analysis
- Full financial model construction
- Sensitivity testing
- Debt structuring strategy
- Lender negotiation
- Funding execution
We do not simply “find a loan.”
We build the investment case that secures the loan.
In a market flooded with retiring owners and acquisition opportunities, preparation is the difference between:
- A funded deal
- And a missed opportunity
The Decade Ahead
Over the next 10–15 years, Australia will witness:
- The retirement of tens of thousands of SME owners
- Continued business listings driven by demographic shifts
- Increased consolidation in fragmented industries
- Greater reliance on structured acquisition finance
Those who prepare, model properly, and structure intelligently will benefit from one of the largest SME ownership transfers in Australian history.
For buyers ready to step into established, profitable enterprises — this is not a time of decline.
It is a time of strategic opportunity.
And with the right advisory partner, that opportunity can be executed with clarity, discipline and confidence.
