Stuck between stations

You know that feeling when you are trying to tune into a radio station and you can’t quite find the signal? That’s what it’s like trying to read the business environment at the moment.

Just take the last few days as a snapshot.

Yesterday, we had Yahoo!7 swoop in and pay $40 million for group buying site Spreets, in a deal that suggests asset prices in the internet/new media sector are actually pretty healthy right now.

We’ve also had a few rich list members suggesting they are aiming at floats (including Paul Lederer from Primo Smallgoods and the Wagner family, who own a big Queensland construction business), big corporate plays from Air New Zealand and Village Roadshow, and various rumours that companies are looking to offload assets as the economy improves.

But on the other hand, we’ve had some bad news. Pub group Icon Hospitality went under yesterday, while receivers pounced on more assets belonging to rich list member Luke Saraceni.

What do the mixed signals tell us? Here is what I am hearing:

• Debt is still a dirty word. While banks are starting to lend again for growth initiatives, they will only lend to companies with strong balance sheets. And if you are still carrying debt from the pre-GFC days, then you are still not out of the woods.
• Some sectors are still very patchy. Retail, wholesale, hospitality and property would be at the top of my list. Internet and services businesses appear to be going better.
• Bargain hunters picking up assets and businesses right now are getting good prices, but asset prices do appear to be rising.
• Well-run businesses are coming to the fore. Good management can command a premium.
• Things are heating up in the tech sector.

The overall picture in Australia remains hard to read, particularly after the start to the year we’ve had in Queensland and Victoria.

Entrepreneurs need to tune in to the rhythms of their sector very carefully.