The New Gold Rush: Retiring Baby Boomers Selling Their Businesses in Record Numbers
Will you miss the next Gold Rush?
According to professionals in the sale of small and medium sized the next five to ten years will see the greatest transfer of business ownership in history as Baby Boomers begin to retire.
The new Gold Rush is the upcoming tsunami wave of Baby Boomer-owned businesses which will be for sale as their owners decide that it’s finally time to retire for any of a variety of reasons ranging from age to health to simple burn-out.
There are something like 78.2 million Baby Boomers out there. According to recent census figures, 7,918 people started turning 60 every day back in 2006 or 330 each and every hour.
The question of how many businesses will be for sale is a bit more difficult to answer accurately.
“An estimate of 65% to 75% of all small businesses will go up for sale in the next five to 10 years. Why? Retiring baby boomers.” – Inc., April 2008
When you consider that there are 26.8 million small businesses in the country, it’s safe to assume that there’s going to be lot of inventory coming onto the market over the next few years. If we use Inc.’s lower figure, 65%, that’s 18,950,000 businesses changing hands.
However, it gets even more interesting. In normal economic conditions, only one business in four listed with a broker finds a buyer. That’s the long term industry average. The other three listings simply expire and we don’t know what happens to them afterwards. In some cases, the owner turns out the lights and puts a padlock on the door. In others, the owner is able to find a buyer through some other means to take over the business.
However, these are obviously not normal economic conditions since the usual sources of credit buyers rely upon to help finance a business acquisition have pretty much dried up.
So what does all this mean? Well, it’s in a sense the “perfect storm” for picking up deals on small businesses or just their assets if you prefer. The surge in inventory coupled with a scarcity of financing are working to create the next Gold Rush. Any Baby Boomer interested in selling his or her business will need to be generous with seller financing and very accommodating on other terms.
Growth through acquisitions of competitors, suppliers, and customers has always been the best option for those interested in building their businesses as rapidly as possible. For the next five to ten years it will be even better.
So you have a choice. Jump on the opportunity now or kick yourself a few years down the road for having missed yet another golden opportunity.