If you are in the market of buying or selling a business, there is a good chance you have heard of the term “silver tsunami.” This term is a powerful metaphor for the significant demographic shift caused by the aging baby boomer generation.
As it relates to business sales, it’s been said that it could lead to massive transfers of businesses. Various statistics indicate that of the 70+ million baby boomers, at least 10 million own a business. With over 70 million baby boomers, at least 10 million of whom own businesses, we are on the brink of a massive transfer of business ownership.
I have no doubt that business sales will increase, but I want to offer a word of caution to first-time buyers: you might not have your pick of opportunities and could potentially miss out.
Why You Might Miss Out:
Generational Transfers: Many of these businesses are passed on to the next generation. Family succession plans are standard; many owners prefer to keep their businesses within the family.
Private “Off-Market” Sales: Many businesses will transfer to private, off-market sales. These deals happen behind closed doors, making them inaccessible to the general buying public.
Business Viability: A considerable number of these businesses are jobs for their owners rather than fully-fledged companies. They are often unsuitable for sale and may simply shut down.
High Competition for Quality Businesses: The competition is fierce for rare, larger, consistently profitable, well-run companies. Substantial money is spent chasing these lucrative deals, making the buying process highly competitive.
So, Here’s My Two Key Takeaways:
For Buyers: If you’re looking to buy a business, it’s crucial to be prepared. Focus your search, secure your funding, and be ready to move quickly. The best opportunities will go fast; you must be agile to secure a deal.
For Sellers: This could be a golden opportunity! You can capitalize on the increased demand with the right preparation and guidance.
In Conclusion
The “silver tsunami” might seem like a wave of opportunity, but in reality, it requires careful navigation to ensure you don’t miss out on the best deals. Being prepared and strategic in your approach is key to making the most of this demographic shift. Make sure to be aware of these factors when you are looking to buy or sell a business, happy dealmaking!
