Permanent Migration Intake Boosted to 195,000. Will it Affect Business Sales?

by Vanessa Lovie 5th of October, 2022

Permanent Migration Intake Boosted to 195,000. Will it Affect Business Sales?

In response to the shortage of workers addressed at the Job Skills Summit in Canberra, the Albanese Government will be increasing permanent migration visas from 160,000 to 195,000 for the 2023 financial year.

“I want to emphasise that one of Labor’s priorities is to move away from the focus on short-term migrants, toward permanency, citizenship and nation building.” Home Affairs Minister Clare O’Neil

In an attempt to fill the immediate shortages in healthcare, infrastructure and the technology sector 35,000 new visas will be available to address the severe shortages.

The overall plan to increase available visa numbers to 195,000 includes 142,400 in the Skill Stream, 52,500 in the Family Stream and 100 places in the Special Eligibility Stream.

Increasing buyer confidence and the potential number of buyers through visa options can have an impact on business sales.

This has a number of flow-on effects for internationals looking to enter or stay in Australia. The increase in permanent migration visas will allow more skilled workers to stay in Australia, more to enter and hopefully fill the void experienced by the current skills shortages.

Covid Effect on Immigration

During the peak of Covid-19 when borders were closed we saw a significant drop in immigration.

“It is phenomenal. We were growing through migration. In fact, prior to the pandemic, 60% of our population growth was because of arrivals from overseas. Last year [2020] that was just 2%. So, 98% of our growth is a natural increase at the moment and even the births are not doing very well. So, we just have not seen such low numbers, such small growth in Australia for a century,” Mark McCrindle, founder of the McCrindle Research agency

A stall in business sales was also experienced as people became reluctant to list their business for sale in fear they wouldn't achieve an optimum sale price.

“In terms of the sellers there was a bit of a mindset: ‘Nobody’s going to buy during COVID so I’m not going to put my business on the market.’” Dean DeMeyer, Finn Business Sales.

The way negotiations took place and businesses were sold also changed.

“I had to arrange zoom interviews with each of them as the owners walk around the factory, I was zooming the owners and the machinery. I said if you’re interested, put down a holding deposit and fill out a form.” Alan Maguire, the principal at Maguires Real Estate.

To address the decline in population growth the Albanese Government is pushed to increase visa numbers to encourage people to come to Australia.

“But the impact of COVID has been so severe that even if we exhaust every other possibility, we will still be many thousands of workers short, at least in the short term” Home Affairs Minister Clare O’Neil

The Jobs Skills Summit had a core focus on fixing the skills shortage Australian businesses are currently experiencing. With over 100 roundtables held on the issue, Home Affairs Minister Clare O’Neil highlighted;

“This is a turning point in our history as momentous as the post-war ‘populate or perish’ program that was the foundation of our post-war reconstruction, nation building and national security.”

Immigration will Increase Buyer Confidence and Help Business Sales

In terms of business sales, immigration can help address the current issue of staff shortages.

Over the past 6 months there has been a constant cry from hospitality owners on the lack of workers available as Venue owner Kane Mansfield shared with ABC news

"Because every industry is needing staff at the moment, we've got a lot of bar staff taking regular day jobs…. They don't want to do the hospitality hours anymore, so we're losing people to other industries."

As the Government rushes to implement the new increase in immigration visas this will hopefully have an impact on business operations.

With numerous headlines highlighting the struggle to keep doors open due to the lack of staff, the ability to sell a business may be affected. Especially in the retail and hospitality sectors.

When someone wants to buy a business, they need to know that the business will continue to operate at the same level and staff are a vital part of a business's success. If the seller cannot guarantee the staff will stay when the business is sold, it may affect the sales process.

The value of a business may decrease if the current staff shortages will continue to affect the future operation of the business.

Ensuring a business can successfully continue to operate is a core part of the business sales process. Addressing the issue of skills shortages will increase buyers' confidence in buying a business.

Buying a Business for Immigration Purposes

A growing sector of business sales is people who are immigrating and purchasing a business for visa purposes.

You will find numerous business listings highlighting the visa stream that a particular business may be applicable for. Such as this Chinese massage business for $138,000 in Brisbane QLD.

“This business also holds the potential for expansion into the fast-growing traditional Chinese medicine niche, at the buyer's digression, with the added option for a 491 skilled worker visa, available to the right buyer.” Bsale ID 592211

Business brokers work closely with immigration lawyers to ensure they have a wide variety of buyers available and understand the requirements. Such as a cafe for sale in Sandringham Victoria taking $20,000 a week for $389,000

“Great business for a small family, owner-operator, or for VISA purposes” Bsale ID 592856

There are a number of visas available under the working and skilled visa streams such as the Subclass 890, Business owner visa and 491 Skilled Visa (regional).

Business brokers are leading the way by working with Governments around the world to promote business ownership in Australia

Elle Likopolous from Absolute Business Brokers has been heavily involved with the Chinese Government.

“I was the first person to be invited out of the business broking industry in Victoria, the first to be given a formal invitation by the Chinese government to go and speak in China at seminars across different regions to investors and give them basically true information about buying a business and endorse investment opportunities in Victoria in small and medium-sized businesses and given that seal of approval that I’m trustworthy and give sound advice.”

Speaking with the Prime Minister of Greece just before lockdown, highlights the strong connections business brokers are building with foreign countries to help encourage immigration to Australia.

“He was going to give us recognised accreditation that we were to be the trusted source of contact for 188 Visas and any visa-related sales with them. So we are really looking forward to kickstarting that again and we are really excited about what we can do in Europe” Elle Likopolous

Final Thoughts

A core part of a successful business sale is the negotiation between the seller and buyer.

A buyer wants to be confident that the business they are buying will continue to operate on the same level (ideally higher). So if the business is being hit by staff shortages or may struggle to service its clients in the future, it can impact the sale.

An increase in Immigration is good for business sales. It increases buyer confidence and also opens up more opportunities for sellers, as foreigners look to buy businesses for immigration purposes.

If you're interested in buying a business, reach out to the Bsale team to assist.

Tags: selling government