By Robert Warrick Feb. 2019
We’ve all read the headlines and heard the talk. "Baby boomer business owners are going to be exiting in record numbers. The tidal wave will be immense. Get ready for the wave." But guess what, it’s not happening -- at least not yet. Don’t get me wrong, eventually every boomer business owner will leave their company, but I don't think the exodus will look like the headlines expect.
Boomers are roughly defined as anyone born between 1946 and 1964, meaning today they are between 54 and 72. Assuming boomers are equally distributed among that age range, a little more than half of them are under the age of 65. It is quite reasonable to expect that they are still actively operating their businesses. But, what about those over the age of 65? Shouldn’t their mass exodus from ownership been felt by now?
Not so fast……. To understand why baby boomers over the traditional retirement age of 65 are holding onto their businesses, it’s important to dig a little deeper into the psyche of today’s baby boomer business owner:
So, what does this mean to the marketplace? What should all these baby boomer business owners be doing? The popular belief seems to be that if they take their business to market, it may be lost in a sea of others for sale, and buyers will have a feeding frenzy as they buy business after business for bargain prices. Here’s the reality check:
-Fewer baby boomer business owners going to market than expected
-Businesses with good cash flow are in high demand
-Premium prices are being paid for quality businesses
-The next decade could see historic levels of wealth transition through SMB M&A
The above-mentioned reasons boomers are holding onto their businesses are very real. You will need to address each to make sure you are ready to sell. Do you have enough money saved? Do you have a purpose for life-after-business? If so, you might be in a perfect position to capitalize on a strong seller’s market, the type we might not see for many years to come. Now might be the best opportunity you will have to maximize your value as you sell.
Robert Warrick is Founder & President of WMS Companies, Inc, a business advisory firm specializing in commerce enablement, mergers & acquisitions. Business Brokerage is through Calhoun Companies.