Is the Economy Working Against Your Exit? – with Warren Hogan

In this special bonus episode of Buy Grow Sell, Simon Bedard sits down with Warren Hogan, Managing Director of EQ Economics and Chief Economic Advisor to Judo Bank, to get a straight read on the Australian economy. Warren covers why inflation is proving stickier than the RBA expected, what interest rates are likely to do over the next 12 months, and the succession cliff quietly building as baby boomers exit business ownership. For business owners with a two to three year exit horizon, Warren gives specific advice on what to watch, what to avoid, and how to stay positioned through volatile conditions

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What You Will Learn in This Episode

Why is Australian inflation proving harder to control than the RBA expected? 

Australian inflation is proving persistent because the RBA entered the current global energy shock with unresolved domestic inflation, causing second-round effects on wages and costs to accelerate faster than in comparable economies like Canada and New Zealand. Warren Hogan argues that this was the direct result of an RBA strategy that was "completely at odds with anything they've done in the past," as the bank chose to limit rate rises in a failed attempt to protect unemployment. When the economy picked up, inflation "just popped straight back" because the underlying domestic problem had never been fully resolved. Consequently, the flow-on from energy prices into wages, costs, and margins across the whole economy is occurring with greater magnitude than in nations that tightened monetary policy more aggressively. 

Where are Australian interest rates heading over the next 12 months?

Warren Hogan forecasts that the Australian cash rate needs to reach at least 5%, with at least 100 basis points of rate rises still to come to align with the nation's growth potential. This adjustment is required to bring the "real" interest rate—the cash rate minus inflation—toward Australia's estimated 2% growth potential. While necessary, Hogan argues the RBA’s committee structure may prevent the institution from acting with the conviction required, likely extending the period of economic pain for the household sector and those on variable-rate mortgages.

What is the single biggest operational challenge for Australian business owners right now? 

The single biggest operational risk for Australian businesses is a structural—not cyclical—labour shortage driven by the retirement of the baby boomer generation. This five-year trend has made finding and retaining staff the "annus horribilis" of running a business, forcing owners to manage rising wages and new workplace regulations that squeeze margins long before the impact shows up in financial reports. 

What is the succession cliff and why does it matter? 

The succession cliff refers to the 50% of Australia's 2.7 million private business owners expected to retire in the next five years, creating a massive funding gap for potential buyers. Simon Bedard raises this directly in the conversation. According to ABS data, there are 2.7 million private businesses in Australia. MYOB surveys indicate that 50% of baby boomer owners in that cohort are expected to retire in the next five years. The problem is not a shortage of buyers — it is a shortage of funding. Banks will readily finance the acquisition of a business turning over $50 million with a $10 million profit. A business turning over $2 million, employing four people, with a profit of $200,000 gets far less interest. Simon's observation from deal data is that transactions fail not because buyers cannot be found, but because funding cannot be secured. The US has the Small Business Administration loan program to address exactly this gap. Canada has a government guarantee scheme. Australia has neither. Warren's response is unambiguous: it is not just an industry problem, it is a community one. If small businesses cannot be sold, they close — and with them go the jobs, the tax base, and the accumulated skill sets that cannot easily be replaced. 

What should a business owner with a two to three year exit horizon be watching? 

If you are a business owner looking at a two to three year exit horizon, Warren Hogan identifies two risks worth monitoring. The first is a credit squeeze, but he is not overly concerned about this in the near term. The more significant risk is asset prices. If inflation forces interest rates high enough to break something in the economy, asset prices could fall 20%. His advice is direct: do not line yourself up to transact when that is happening. Be agile, watch the macro environment, and avoid timing an exit into a deteriorating market. The second part of his advice is about what to keep doing regardless — keep investing in the business, take a long view, and do not overleverage. Warren's framing for the next two to three years is "choppy seas on the way to the promised land." The long-term fundamentals of the Australian economy are strong. The path to get there is not. Business owners who stay conservative on leverage, optimistic on the long term, and alert to timing will be best placed. 

How should businesses be approaching AI right now? 

Businesses should approach AI as a strategic tool for reshaping entire processes and reallocating staff to higher-value work, rather than a simple mechanism for reducing headcount. Simon Bedard observes that business owners are prioritising human reallocation, while Warren Hogan notes that while the first wave of individual tool adoption—like Claude and Copilot—is underway, the real productivity gains lie in redesigning business processes so fewer people can produce significantly more output . To achieve this, Hogan advises taking your best staff offline to architect these changes, even if it results in a temporary performance dip before the business scales. While smaller businesses have a distinct speed advantage in testing and implementing AI, they must remain mindful that they often have less financial buffer than larger organisations to absorb the transition period.

What does the US economic lead mean for Australian businesses? 

The US economic lead indicates that Australian businesses must urgently adopt US lessons in AI application and operational flexibility to overcome a 50-year productivity low and remain competitive as the US economy streaks away from the world. Warren Hogan’s assessment is stark: while the US pulls ahead through economic flexibility and a willingness to displace workers into new roles, Australia remains "on its knees" regarding productivity—a level of stagnation not seen in half a century. For local business owners, the practical implication is to study and apply what is currently working in the US technology revolution, which thrives on natural market flexibility rather than government policy. Hogan warns that Australia’s current political settings, which prioritise job security over the necessary reallocation of talent, risk causing the country to fall further behind until the pain of inaction becomes unavoidable.

Show Notes (YouTube)

(00:57) Why Australian inflation is more persistent than the RBA anticipated 

Australia entered the current global energy shock with domestic inflation already elevated — the RBA's earlier decision to limit rate rises left the economy running hot, meaning second-round effects are now hitting faster and harder than in comparable economies like Canada and New Zealand. 

(05:28) Where Australian interest rates are heading over the next 12 months 

Warren Hogan’s view is that the cash rate needs to reach at least 5% to bring real interest rates in line with Australia's 2% growth potential – and the RBA's committee structure makes it harder to act with the conviction needed to get ahead of the problem. 

(09:49) The single biggest structural challenge facing Australian business 

Chronic labour shortages driven by the retirement of the baby boomer generation have fundamentally changed what it means to run a business in Australia — managing and retaining staff is now the primary operational risk for most businesses, and it is not a cyclical problem. 

(00:21:57) How Australian business owners are actually using AI 

Simon Bedard's observation from working directly with business owners is that not one of them is embracing AI to reduce headcount — they are using it to reallocate people to higher-value work. Warren Hogan validates this and extends it: the first wave of AI adoption, individuals using tools like Copilot, is already underway, but the real productivity gain comes from reshaping whole business processes so that fewer people produce more output. For smaller businesses the advantage is speed of implementation, but the challenge is absorbing the performance dip that comes before the turn.  

(26:25) The succession cliff Simon has been watching 

Australia has 2.7 million private businesses, and approximately 50% of baby boomer owners are expected to retire in the next five years — without government-backed funding programs similar to those in Canada and the US, many of these businesses will close rather than sell, taking jobs and skill sets with them. 

(33:50) Final advice for business owners with a two to three year exit horizon 

Warren Hogan's advice for business owners with a two to three year exit horizon is specific — the real risk is not a credit squeeze but a sharp fall in asset prices, which could drop 20% if inflation forces rates high enough to break something in the economy. The discipline is to avoid being mid-transaction; when that happens, stay conservative on leverage and keep investing in the business for the long term because, in Warren Hogan's words, the long-term fundamentals of this country are strong — the path to get there is just going to be bumpy. 

 Key Takeaways 

1. Australian inflation is not solved — and the global shock made it worse. 

The RBA entered the current environment with domestic inflation already running hot. Business owners should plan for higher costs for longer, with wages and input costs continuing to build pressure on margins. 

2. Labour shortages are structural, not temporary 

The retirement of the baby boomer generation is removing a generation of experienced workers from the economy. AI is the structural answer, but it requires investment and courage to implement properly. 

3. The succession cliff is a genuine economic risk few are talking about. 

Australia has 2.7 million private businesses, and approximately half of baby boomer owners are expected to retire in the next five years. Without better access to finance for smaller acquisitions, many of these businesses will close rather than sell. 

4. For business owners planning to exit in two to three years: watch the macro. 

Warren Hogan's advice is direct. Avoid transacting when asset prices are in sharp decline. Do not overleverage. Keep investing in the business — the long-term fundamentals are solid, but the next two to three years carry real volatility risk. 

5. AI is not about replacing people — it is about doing more with the same people. 

The business owners Simon Bedard has been working with and talking to are wanting to use AI to reallocate people to higher-value work, not cut headcount. The businesses that will win are the ones that start reshaping their processes now, before the competitive pressure forces them to. 

About Warren Hogan

Warren Hogan is the Managing Director of EQ Economics, an advisory firm specialising in strategic planning and economic forecasts for Australian businesses. He also serves as Chief Economic Advisor to Judo Bank.

With two decades of experience in banking and financial markets, Warren has held senior roles including Chief Economist at ANZ Bank and Credit Suisse Australia, and Principal Advisor at the Australian Treasury. He is also an Industry Professor at the University of Technology Sydney (UTS) Business School.

A regular contributor to the Australian Financial Review and Sky News, Warren is known for independent, often contrarian views that have established him as one of Australia's most accurate economic forecasters. 

Connect with Warren Hogan

LinkedIn: https://www.linkedin.com/in/warren-hogan-835581116/

Website: https://eqeconomics.au

About Simon Bedard

Simon Bedard is the Founder and Managing Director of Exit Advisory Group, host of Buy Grow Sell, and author of Exit Like an Expert (2026). He is the National Chair of the Australian Institute of Business Brokers (AIBB) with more than 20 years of M&A experience advising Australian business owners through business sales, valuations, exit and succession planning. 

Connect with Simon Bedard

LinkedIn: https://www.linkedin.com/in/srhbedard/
Website: https://buygrowsell.com/
Website: https://exitadvisory.com.au/

Exit Like an Expert — Simon Bedard (2026) 

If this episode raised questions about your own exit timing or how to position your business through the current economic environment, Exit Like an Expert covers the full process — from what your business is worth, to how to find the right buyer, to what life looks like after the deal. 

Get your copy: Exit Like an Expert Book

About Buy Grow Sell 

Buy Grow Sell is the podcast for business owners on what it actually takes to buy, grow, and sell a business. Each episode features real stories and expert conversations on the decisions, deals, and conditions that shape business outcomes. Hosted by Simon Bedard, Founder and Managing Director of Exit Advisory Group, National Chair of the Australian Institute of Business Brokers, and author of Exit Like an Expert. Available on Spotify, Apple Podcasts, iHeartRadio, and YouTube.