What a buyer reads into your industry before they read your numbers
Company failures rose 34.2 per cent in a year. A buyer brings that context to your business before they open a single spreadsheet, and there is a way to answer it.
General information only, not financial, legal or taxation advice. Tony Pope holds Queensland Office of Fair Trading licence 4963575.
The short version
- 13,413 companies entered external administration or had a controller appointed in the 12 months to 31 May 2025, up 34.2 per cent on the 9,993 a year earlier.
- Construction and accommodation and food services have carried the largest share of appointments, so owners in those sectors are priced against a reputation before they are priced on their accounts.
- You cannot argue a buyer out of the sector context. You can give them something specific enough to override it.
- Contracted forward work, customer concentration and a clean creditor position do more to separate you from the sector than any amount of explanation.
A buyer forms a view about your business before they see anything about your business. They form it from the sector, and at the moment the sector news is not helping anybody.
13,413 companies entered external administration or had a controller appointed in the 12 months to 31 May 2025, up 34.2 per cent on the 9,993 recorded for the same period the year before. Construction and accommodation and food services have consistently carried the largest share of appointments.
If you are in one of those sectors, that number walks into the room ahead of you.
Why explaining it does not work
Every owner in a struggling sector says the same three things: we are different, our customers are loyal, and the ones that failed were badly run.
All three may be entirely true. None of them is evidence, and a buyer has heard all three from the last four businesses they looked at, including at least one that was not different at all.
The instinct is to argue. The thing that actually works is to be specific, because specificity is the one thing a failing business usually cannot produce.
What overrides a sector assumption
Contracted forward work, with names and dates. Not a pipeline, not verbal commitments, not "we're always busy". Signed work with a value and a start date. In construction this is the single most powerful document in the file. In services it is the contract renewal schedule.
Customer spread. A buyer in a nervous sector is trying to work out what happens if one thing goes wrong. A business where the largest customer is 8 per cent of revenue answers that question. A business where it is 40 per cent has confirmed their fear rather than settled it.
The creditor position, put in front of them. Trade creditors within terms, no ATO payment arrangement, or one that is disclosed with the schedule attached. An owner who volunteers this is doing something a distressed seller structurally cannot do, and buyers know it.
Margin that has held. Three years of gross margin by month tells a buyer whether trade is genuine or whether it has been bought with discounting. Falling margin on flat revenue is the pattern that precedes most of the failures in those statistics, and buyers have learnt to look for it.
The uncomfortable half of this
Some businesses in these sectors genuinely are carrying the risk the numbers describe, and preparation will not change that in ninety days.
If your forward work is thin, your margin has been sliding and your creditors have stretched, the honest answer is that a sale now will be priced accordingly, and that a buyer will be right to price it that way. The choices then are to fix the underlying position over twelve to twenty four months, or to accept the number the current position supports.
What does not work is running a campaign and hoping the questions do not get asked. They get asked in due diligence, after you have spent three months and told your accountant, and the renegotiation at that point is worse than the price you would have accepted at the start.
The practical version
Before you go to market in a sector under pressure, build the four items above into a single pack: forward work, customer spread, creditor position, margin history. Put it in front of a buyer early rather than waiting to be asked.
A buyer who is handed the four things they were going to dig for stops treating you as a member of a category. That is the whole objective, and it is worth more than any amount of reassurance.
Common questions
Does a high insolvency rate in my industry reduce what my business is worth?
It affects the starting assumption rather than the value directly. A buyer approaching a sector with visible failures applies more caution, asks for more evidence and often wants more of the price deferred. Businesses that can evidence forward work, spread customers and clean creditors are frequently priced well inside the sector assumption, because the evidence does the arguing.
Should I avoid selling while my industry is in the news?
Not necessarily, and waiting has a cost too. Buyers are still active in sectors with elevated failure rates, often precisely because competitors are leaving. The question is whether your business can demonstrate the specific things that distinguish it, and whether waiting will actually improve those things or just delay the same conversation.
What do buyers look at first in a construction or hospitality business?
Forward work and the creditor position, in that order. In construction that means contracted work in hand, retentions, the licensing position and the state of work in progress. In hospitality it means the lease, the wage line against turnover, and whether trade is holding rather than being propped up by discounting.
Keep reading
All notes on selling a business · All seller guides · What is my business worth?
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