The Changing of the Guard

As Boomers retire, the United States will see a wave of business sales.

Throughout their lives, Baby Boomers have exerted a massive influence on our country’s culture, politics and economy. And that holds true for the world of small business.

Over the next several years, the United States is poised for a sizable transfer of company ownership as the Boomer generation ages into retirement. The majority of small business owners—51.7 percent—are between the ages of 50 and 88, the U.S. Small Business Administration reported.

Business brokers and other M&A specialists have been preparing for a surge in sales for years, and it looks like the trend is taking hold in force. According to Pepperdine University researchers, the nation’s M&A advisers are expecting a 66 percent increase in business-sale activity during 2016.

But not everybody who wants to sell will be able to do so. The working estimate is that only 25 percent of businesses will ever sell, Pepperdine reported. Many companies, especially those at the smaller end of the market, won’t find a buyer and will instead be forced to liquidate and quietly close their doors.

One way to increase the odds of successfully exiting your business is to start planning early. Advance planning gives business owners the ability to assess weaknesses, build on strengths and make their businesses as attractive as possible.

Unfortunately, too many owners fail to prepare. According to BizBuySell.com, about 49 percent of prospective sellers plan to exit their business in the next five years. Only a minority of 29 percent have done their homework and are actually prepared to enter the sales process.

It doesn’t matter if you’re 62 or 26. If you’re a business owner, you need to start thinking about your exit strategy today.