Why? Retiring baby boomers! Demographics (SME Research) dictate that up to two million businesses will be sold between the years of 2017-2020.
Currently, Bizbuysell.com reports approximately 8,000 business sales per year. Even if that number is four times under reported (which I think it may be) we are looking at a five to ten fold increase in the number of businesses sold. And, that is how many businesses are sold, not how many will TRY to sell.
What are the market implications of a seller tsunami?
• The market turns from a seller’s market which it is currently, into a buyer’s market.
• Lower valuations due to increased competition for buyers. In fact, some believe due to the shrinking workforce, there will be a huge lack of skilled buyers in the marketplace.
• Incredible opportunity for buyers and companies that want to acquire great businesses!
What can you do to if you plan to sell your business in the next 5-10 years?.
• Sell earlier than later. Start planning your exit now. Even if you have to work a few years for the new buyer, it may be time to go. Talk to your advisors now!
• Expand your businesses sales and profits. Make more money and perhaps your value will increase more than the marketplace devaluation. Plus, the money you make in the meantime would counter the lost value.
• Be a part of the buying opportunity and acquire businesses through the tsunami. Eventually the marketplace will settle and you will have built a large profitable business, especially if you are on the young side of the boomer age bracket.
• Ignore it, and sell anyway. Hopefully you made your money running your business and the sale is gravy. Price any company right and it will sell in any market condition!
My goal in providing this information is not to scare you into selling now, but to really encourage you to start planning. Perhaps the prediction of the tsunami may not come to pass, but it is hard to deny the numbers and the market force of the boomers retiring. I’m ready for the wave! Surf’s up!