I have just had a nice chat with a long time friend and business broker who is based in mainland Europe. It was a pleasure to catch up with him as it always is. We usually talk business and then chat about football and maybe share a joke. We last spoke about a week before I retired. Today we chatted mainly on a personal level but we had a nice chat about the markets when he said to me “What have you lot done with all my f*****g buyers?!”. Very perturbed is my friend because we used to jointly market a number of businesses on the mainland but now all his enquiries from the UK have dried up. Not a sausage.
You see, I used to send him 30-40 buyers a month of mid-market family lifestyle stuff. You know, tea shops, guest houses and the like. A lot of our buyers were families where both parents worked for companies such as HSBC, Accenture, British Airways, Sony, or BT in good jobs. Indeed we had a nice spike from October to Christmas as people realised they would now be working from home full time and didn’t need to be within an hour of London anymore.
I discussed with my friend the coronavirus situation, “non, non, non” he says. He goes further: “its bloody Brexit! Taken away all my nice English buyers!”
He did go further to say that I got him better quality buyers than any other English broker but that is beside the point.
We examined this further and noted that in our sub €5,000,0000 standard marketplace, the loss of English to the mainland could lean itself to a market softening as the pool of buyers was weakened significantly in the lifestyle segment. We argued about the extent of the slip. I said 5-6% he said 10-12%. We agreed to split the difference at 8.
So what does this mean? Well this does mean the possibility of some bargains, but the upshot is far worse. Because of the Brexit changes, Brits seeking a better life in another country are now having more and more red tape put in their way to achieve this. Every year the pool of people wanting to leave middle to senior roles at companies such as HSBC, Accenture, British Airways, Sony, or BT for a more balanced lifestyle increases dramatically. At one point I had over 20,000 such people on my book. So many of these people who believe that this future lies in another country will find it harder to achieve this in Mainland Europe and are turning off this idea. A shame really as these people and their lovely families bring investment, sales opportunities and employment opportunities into the areas in which they choose to make their new home and generally become an asset and credit to their new local communities.
Does this mean that the values of lifestyle businesses in the UK will rise? Very unlikely. The market is starting to rapidly ignore pre-corona trading values and prices are slipping. Things like pubs, hotels and restaurants have further to fall by the looks of it. What this does potentially mean is that there is potential for lifestyle businesses to sell faster. This also means that some companies will see their middle to senior talent pools depleting with only a very poor junior pool that is wanting in skill and experience to take up the slack.
As for my good friend. I fear he will be mourning the loss of the British market for some time. A shame. I do wish him very well though as he a good friend and was a great colleague. I look forward to being able to travel to France after Covid and calling in on him to share a beer or 3 much like we used to do before I retired.
Whoops! I have nearly done something I said I would not do in retirement – write Market Comment!
Postscript: If you are from the UK and are looking to buy a lifestyle business in Mainland Europe, do get in touch with me and I will introduce you to my friend. I can assure you that he will look after you very well and that he really knows his stuff.