The Silver Tsunami
The Silver Tsunami. Ever hear of it? Probably not, but it’s coming our way – and it’s coming fast!
The Silver Tsunami refers to the massive number of U.S. Baby Boomers that are starting to retire. According to the Washington Post, 10,000 people in the U.S. are now hitting retirement age every single day! And this stunning situation will continue until at least 2029!
Of course, not all these retiring Boomers own businesses but a good many of them do – and in order to retire, they’ll have to sell them.
Many business owners with children hope that the kids will take over the business someday and keep it in the family. However, we’ve found it to be very rare that the next generation is interested in taking over the business. Granted, it happens occasionally, but most kids worked in the business when they were young – during summer breaks from high school and university – and they generally don’t have tons of fond memories of having to work for Mom or Dad when they would MUCH rather be hangin’ with their friends.
So, the situation that’s coming down the pike is a constant and growing flow of businesses of all sizes coming to market for at least the next 12-13 years.
What are some of the impacts that this flood of businesses coming to market could have? One of the effects will surely be a demand for more professional business brokers. These business owners will need experienced brokers to help find and negotiate with buyers. And while it may be too early to tell, if the laws of supply and demand have not been repealed, one of the effects could be lower prices for businesses – a condition that should be music to buyers’ ears but one that will surely disappoint business owners counting on their business’ value for retirement.
But I’m an optimist. Buyers are always going to want a well-run, organized, profitable business – and they will pay a fair price for one that exhibits those traits. And wise sellers will always want the advice of experienced professional business brokers.
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Business owners that are approaching retirement would be wise to get their business ready for sale. If the market becomes crowded with business offerings, the ones that look the best will receive the most interest from the most potential buyers. The more buyers that are interested, the higher the ultimate price is likely to be. And consider the talent that you’ll need to properly value, market, negotiate and close on the sale of your business.
We have counseled for years that owners should start preparing for the sale of their business three years before they plan to start the process. (Get some specifics on how to ready your business for sale here.) That said, we rarely find an owner or owner group that has acted on that advice. More’s the pity because the day WILL come, whether they’re ready or not.
If you’re a business owner and you’re starting to think about retirement, get started on a plan. Talk to a good business broker or advisor and get some sound guidance so that, when the time comes, you’re ready to pull the trigger in the knowledge that you, along with your advisor, have done the work necessary to make your business stand out from the pack – and, therefore, more valuable.
Questions or comments? Send them to me in the comments box, below. Who knows? We may address them on one of our future blog posts or podcasts! And don’t forget to check out – and subscribe to – our podcast at WorldwideBusinessPodcast.com on WBBN-fm, the Worldwide Business Brokers Network.
Joe
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