Do you remember all those scary articles claiming that baby boomers were all going to sell their businesses at the same time? ………….And that would cause a glut of businesses for sale …………And that would cause the value of your business to plummet?
Turns out it never happened.
In this article in the Wall Street Journal entitled The Missing Boom In Small-Business Sales the author explains that – surprise, surprise – people like running their businesses. Even when they are 65 years old.
As one business owner quoted in the article said, ““The world has changed and lifespans have changed. Baby boomers are so not dead yet. Do we really think we will fade off into the sunset? No.”
Of course the media always needs a story. And the fear and drama that can be created by the idea that hard working business owners are going to lose all the value they’ve built into their businesses – well, that sounds pretty scary.
And if all 10 million boomers who own businesses put those business on the market at the same time …. well, that would cause a glut. That would be scary. I have written before about the ridiculous over-use of the Tsunami as a metaphor for baby boomers selling their businesses.
But as we have pointed out before:
- The baby boom generation spans 18 years. The youngest boomers are in a different phase of life than the oldest. So there is no reason to group them all together.
- Retirement is a phase of life that goes on for many years. But selling a business is an event. You can sell your business at any time. And as the Journal article points out – as if it were some great revelation – turning 65 doesn’t mean anything to an owner who is enjoying their life and work.
- The biggest block of business buyers happen to be the younger boomers. The International Business Broker Association reports that people between 45 and 54 are the most active buyers of small businesses.
- The increase in business sales from 2012-2014 took place because the economy improved. Owners who had put things on hold starting in 2009 finally had the conditions that were right for selling. Here in 2015, sales are down slightly from last year. One reason is that for several years people who wanted to sell waited. They waited until the economy improved. So sales naturally picked up when the economy did improve. It is the economy more than anything else that dictates the pace of small business sales.
Incredibly, after the author acknowledges that the predicted “flood” of businesses sales never materialized, she goes on to reference analysts who, “expect activity to pick up over the next few years as more boomers hit their 60’s.”
Most baby boomers are already past 60. If the oldest boomers turning 65 didn’t create a flood of selling, why would the youngest boomers turning 60 dramatically change things?
It won’t. Ignore the hype. Aging boomers will not cause a glut in the market. And they will not ruin the value you have built into your business.
Putting Baby Boomer Business Sales In Perspective
For a more enlightening article on the baby boom, you should read this post published by The New York Times in August.
Here the key quote from the article:
“For those who decide to put their business on the market, the pool of potential buyers is the largest it has been in years.”
There are several reasons for this. First, the population has been growing rapidly in the last few decades. It is up over 55,000 million in just the last 20 years.
The total number of people in the prime business-buying years of 30-55 has never been bigger
And it is not just the traditional white male demographic that makes up that population of potential business-buyers. Many more women and minorities are now part of the business buying population. According to a study From BizBuySell, just 8% of business buyers over the age of 65 describe themselves as black, Asian or Hispanic. But 30% of buyers aged 30-49 put themselves into one of those categories.
And women make up 20% of buyers under the age of 49. But just 9% of those over 65.
Another new factor swelling the size of the buyer pool is corporate downsizing. As one broker in the story is quoted, ““I have a lot of guys who are 40 to 50 years old and need to buy a job,” he said. “They’ve been downsized, or transferred out of the area, and they decide to be their own boss.”
In summary: the population of Americans in the prime buying years outnumber the boomers. The rate at which women and minorities are now participating as buyers is unprecedented. And the option to stay in, or return to, a corporate job has never been less of an option. So whenever you decide to sell there will be a sizable pool of good prospects out there. There is no reason to fear a flood, tidal wave, avalanche or Tsunami of boomers all selling at the same time.
The fact that the baby boom generation is not going to kill the value of your business is just one of the 10 Things you will learn in 10 Things You Need To Know Today If You Want To Sell Your Business Tomorrow. Some of the other truths or Things we cover are: why most owners fail to sell their business and why the idea that “business valuation is more art than science” is so wrong. Click Here to learn more and to download your copy of the book.