Analysis of the Businesses Market in Bulgaria

BusinessForSale.BG

BusinessForSale.BG is a subsidiary of BULGARIAN PROPERTIES and a consultancy company dealing in the field of mergers and acquisitions of businesses and companies in Bulgaria. The brand was created in 2009 and is already gaining speed.

A year and a half after BusinessForSale.BG was founded our company cannot report any drastic changes in this segment of the market. There is more activity with regards to the increased number of new businesses offered for sale. In the last few months there is also an increase in the number of enquiries from potential clients. There definitely is interest in the companies we offer for sale but for buyers and sellers cannot agree mostly on the asking price. BusinessForSale.BG helps company owners not only sell their business but also find partners or co-financing.

The main trend in 2010 was more offers for sale or partnership in a business in Bulgaria, as well as an increase in the number of enquiries both from Bulgarian and foreign buyers. Regretfully, there is no increase in the number of concluded deals yet, mostly due to the fact that buyers and sellers cannot agree on the price. Sellers want a price that is too high and buyers want to pay a price that is too low. It is often the case the Bulgarian businessmen add to the price of the business an emotional element trying to put a price on the time which they spent developing it and the other investments they have made. Unfortunately, this approach to forming the price does not work now and everyone who has decided to sell their business at a time like this – at a time of a global economic crunch – must understand that they will not get the price they think their business is worth and which they deserve. Deals are made only for businesses with a sensible price that have potential for developing. Of course, there are always exceptions and they are for businesses which can definitely prove that by investing in them the buyer will get at least 10-15% annual return on the investment.

In which sectors were there most businesses offered for sale in 2010?

The offers were mostly for hotels, bars and restaurants, trade areas, light industry factories, as well as many offers from developers who have halted their projects and want to sell them or find co-financing.

Most offers stay on the market for a long time, even too long. Many businesses remain on the market for more than a year without a clear idea whether they will be sold soon. It is clear to everyone that the times we live in will not help a quick sale. That is why we advise all sellers in advance not to sell now if they can afford not to as the business and expensive assets market is not favorable. Of course, we have quite a few companies which are offered at their market price which according the their owners is a fair price, so that it is known they are for sale if a buyer comes along who is ready to pay for the quality of this company. All our clients understand and do not expect a fast sale, especially if the price is the market price. The reason for that is that potential buyers place too much value on the risk of acquiring a company at present.

Interest of foreigners in buying businesses in Bulgaria

It is no secret that the interest of foreign investors decreased significantly compared to the years before the crisis. This is due to the overall decrease of mergers and acquisitions in Europe, the lack of fresh investment capital and most of all on the uncertainty of the investors that buying a business now would be a profitable decision. Almost all sectors of the Bulgarian economy were affected by the crisis and most companies struggle and don’t make a profit. To buy a business is not a simple decision because the success of the business also depends on a number of subjective factors, the quality of the personnel, the efficiency of the business decisions and all this in a very dynamic environment. However, there is interest in well working and profitable businesses which can prove a stable income and a return on the investment and there are enquiries and even concluded deals. Such companies are in demand even more than before because in tough times all investors look for a secure investment in profitable businesses, which are difficult to find lately. Regretfully, most companies offered for sale in Bulgaria are in a difficult situation, in debt and with decreased turnover. Apart from fresh capital they also need serious restructuring which most often puts investors off.

If the economy continues to be stable and there are no negative trends in the months to come we expect a higher activity of foreign buyers and investors. What is typical for our company is that it manages to offer bargain businesses even to small private investors and buyers from around the world. Thanks to the variety of services we offer all foreign investors in Bulgaria can rely on cooperation on a local level and care of their investment in Bulgaria. At present Bulgaria is doing well on the international business market despite the crisis due to which the image of the country as an investment destination has been preserved. We have all reasons to believe that next year more foreign investors will come to Bulgaria.

Trends and forecast for business sales in 2011

We expect more and more companies from the affected sectors to be put up for sale. There will definitely be good conditions and bargain resale prices in the future as well. Companies which manage to stay on the market will restructure and will start making profit again. When the economic conditions in Europe and around the world improve there will definitely be an increase in acquisitions in Bulgaria. The moment is good for buying an interesting business at a bargain price as bolder investors will take advantage of that. Unfortunately, the accumulated stress and insecurity among players on the market is too big and few of them will appreciate the good conditions. When the environment improves sellers will react and will increase their prices.

We hope that 2011 will bring the long-awaited sobering down of sellers and buyers, their interests will meet and there will be deals. At present one party wants a price that is too high and the other party is ready to pay a price that is too low. The market is stressed and the players are insecure. When things calm down the market will return to its normal rhythm. Of course, no one expects things to be the same as in 2007 and 2008. A normal state would be more deals to be concluded for businesses and companies at reasonable prices. The market players and the economy have already calmed down. If this continues and the process remains stable for at least 6 months we believe that a gradual improvement will start. We do not expect a boom in mergers and acquisitions but we expect a calmer market and more concluded deals in 2011.

View all our businesses for sale and rent in Bulgaria


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