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For years, studies have projected a wave of small companies will change hands in the United States as a “silver tsunami” of aging baby boomer entrepreneurs retire.
But the pandemic, high inflation, rate increases and other economic disruptions and uncertainties have caused nervousness in both would-be buyers and sellers. Now, evidence shows that the big boomer business sell-off is underway, and it’s far from over.
The Small Business Administration estimates that about 10 million baby boomer-owned businesses will change hands between 2019 and 2029. (iStock)
A Forrester study last year showed that younger generations, those born in 1980 or later, now make up the majority (64%) of small business buyers globally.
Here in the US, recent BizBuySell surveys found that 66% of business brokers believe “an increasing number” of buyers will enter the market in 2024, and 75% expect more homeowners to sell their businesses in 2024 than in 2023.
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BizBuySell’s latest report found that transactions increased 10% year-over-year in the first quarter, and analysis expects deals to accelerate the pace through 2024, with more sellers planning to offer seller financing.
As more boomer entrepreneurs retire, the next generation of entrepreneurs will take over. (Southern Jobs / iStock)
Codie Sanchez is the founder and CEO of Contrarian Thinking, a media, investment, and education company that teaches aspiring entrepreneurs how to acquire “boring” cash-flowing businesses, like laundromats. She said fox business in an interview that the “silver tsunami” of boomers selling their businesses “isn’t even close to peaking.”
“We see between 10 and 11 million small businesses for sale in the United States in any three-year rolling period,” Sanchez said. “We see that one in 10 baby boomers who own a business are willing to simply close their business overall, and about six in 10 (i.e. 60%) are open to seller financing…using the profits from your business to give to the next person. generation.”
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Sánchez said many business owners over the age of 65 are thinking about passing it on to someone else. upon retirement, like your own children or an apprentice. Others are considering closing their businesses entirely, and these scenarios present opportunities for aspiring entrepreneurs.
A Forrester study last year showed that people born in 1980 or later now make up the majority of small business buyers globally. (iStock)
“We, as young people, can start going directly to small business owners, who could be our neighbors or parents, friends, people we work for, and ask them about buying the business,” he said, adding: “No “There’s nothing better than when someone young and hungry wants to take charge of their legacy and move it forward.”
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Sanchez, who owns a portfolio of companies, recommends first examining any business to make sure it’s a good fit. Then, once a potential buyer finds the perfect match, he can go through the process of figuring out how to reach a deal.
“I don’t want this to seem too easy,” Sanchez said. “It’s not easy, but I think it’s simpler and more common than people think, and that’s great hope for young people.”