I’m sure you have heard of the term “baby boomer” before. Whether your aunt, grandpa, or you are a self-proclaimed baby boomer, this phrase tends to mean that you were born between 1946 and 1964. So why do the notoriously work-oriented boomers think differently about ownership in a business?
Firstly, according to Forbes, 40% of all small businesses and franchises are owned by baby boomers. And boomers have a very different approach to their business than the millennial generation that will be purchasing those businesses over the next couple of years.
One big difference is longevity. The boomer generation is a cohort that has worked hard all their lives. For many, the idea of quitting work (aka retirement) is almost inconceivable. Boomers defined themselves by their work. For many, becoming business owners has been the pinnacle of their careers. Letting go of their company is more emotional for them than for other generations; they feel that they’re literally losing their identity.
They also love the work. Making money aside, boomers like to know that they are productive and necessary to the company’s success. I’ve met 75 and 80-year-olds who still showed up every day at the office. They’re not ready to quit; what in the world would they do all day?
For many of these owners, their company also makes up most of their social circle. Their customers, employees, and even vendors have become friends – some they’ve known for decades. Letting the business go also feels like letting their friends down.
One 81-year-old owner told me that the only reason he was selling the company and retiring was that his wife had retired five years prior. She was constantly asking him to let the business go and spend more time with her. Finally, he listed the business with me. But he never got to spend that quality time with his wife. He passed away a week before closing.
Luckily, the owner’s daughter was an attorney and familiar with the business, so we closed after just a week’s delay. But I think of that story as a cautionary tale for boomers who don’t yet have a clear strategy and timeline for selling. It’s a difficult and emotional process, as all plans for late-life are bound to be.
But the benefits are substantial. If an owner dies or becomes unable to manage the business, he’s leaving all the difficult decisions and complex negotiations for his family to make. They’ll be executing the transaction while grieving. The business may be considered distressed without the owner as part of the deal, leaving it more vulnerable to being sold at a deep discount. The tax implications of the sale could be disastrous for the owner’s spouse and heirs.
In the end, those are all good reasons to start planning to sell your business soon. An experienced business broker like myself can help you develop a strategy for the sale and transition. I can help you determine a fair market value for your company, and walk you through the process of due diligence and the sale.
Your broker will also consult with you about the market and your timing. High-interest rates have kept some buyers on the sidelines for the past couple of years. This means there will be a lot of money seeking good companies to acquire once interest rates go down.
And going on the market early has its advantages. Ten thousand baby boomers hit the age of 65 every day. When that “couple of years” horizon finally hits, there may be thousands of small businesses that go up for sale within a short period. There will be plenty of buyers, but it will certainly be a buyer’s market with so many options to choose from. The companies that are listed earlier will have less competition and sell at higher prices.
If you’re one of the baby boomer owners who’s considering selling in a couple of years, let’s talk. You’ve worked hard at creating a company that you’re proud of, and I can help you make sure you get full value for what you’ve built when the time is right to leave.
If I can help you evaluate your company’s worth and marketability, the first step is to use our schedule a call with me.
About the author: Jim Parker
jimp@bossgi.com
Jim Parker is an experienced business broker specializing in small businesses. His company is based in Clermont, Florida. As an industry leader, he has served as the past president of the Business Brokers of Florida and currently sits on the International Business Brokers Association’s Board of Governors. Jim is a sought-after speaker who teaches others in his industry best practices in ethics, closing transactions, and finding qualified buyers. He has earned over 50 awards and recognitions in his career.
Jim is a Certified Business Intermediary (CBI), Certified Mergers and Acquisition Professional (CMAP), Masters Certified Business Intermediary (MCBI), and is a Mergers & Acquisitions Master Intermediary (M&AMI. He is one of one of less than 20 business intermediaries in the world that have all four of these designations. To contact Jim, give him a call at (407) 927-8999.