by Kevin L. Baker, MBA
The retirement of the baby boomer generation in the USA and Australia will create a buyer’s market in the coming decade. Business owners looking to exit will exceed buyers. Now is the time to plan. Get out in front of the boom in business selling that is beginning now!
First of all, let’s talk about business sales in America and Australia.
AMERICA
The California Association of Business Brokers says 70 million Baby Boomers are poised to make a great impact on the American economy. Retirement of Boomer business owners will sell or bequeath $10 trillion worth of assets over the next two decades.
These assets are held in more than 12 million privately owned businesses. More than 70 percent of these companies are expected to change hands.
The sale of almost 12 million businesses over the next 10 to 15 years represents a significant increase in the annual number of businesses that will be sold. These owners of businesses should first have a valuation performed. Kevin Baker Inc. can help you with learning about valuation. Then, as an M&A Advisor we can assist you with mapping out a strategy for the sale of your business.
AUSTRALIA
1.4 million business owners that employ 7.9 million people in the Australian economy are looking at exiting in the next five to 10 years. Especially relevant in Australia is “Will there be enough buyers?” Kevin Baker Inc. is helping Australian businesses develop Millennial Succession Strategies. Write and ask for more information.
OPTIONS WHEN SELLING A BUSINESS
1. Don’t sell and let managers run it.
Business owners can tell you they never stop thinking about the business. So even if you semi-retire through letting managers run your business, this not really a good retirement option if you want to rest and enjoy the fruit of your labors.
2. Family succession.
This option is a complicated web of decisions. Family business dynamics are full of relational land mines. Many owners avoid it to keep the peace and still have a family to celebrate holidays with!
3. Management Buyout.
These deals carry heavy debt loads and are the territory where financing sharks swim. Huge debt services become the downfall of MBOs and the winner is the capital partner. Beware!
4. Outside Buyers via a Broker.
These are usually strategic buyers in the same industry looking to vertically or horizontally integrate. As a seller, you will be asked to hold paper and stay on as a consultant with a non-compete agreement for the new owners. So this option has strings attached.
5. Close your doors and put employees out of a job.
Sadly, lack of planning and owners who could not let go and plan for succession end up here. The long hard sacrifices of business success are often lost at the end, rather than becoming an annuity stream for retirement.
NOW WHAT?
In conclusion, succession and exit planning for a business is an issue all owners need to consider. If you or someone you know owns a business and you need help with planning for retirement or a sickness leaves you unable to work–what will you do with your business? Whether its family, employees, or an outside buyer, succession is a time and resource consuming process.
If you want a free consult to get started with planning for your exit and succession, message me below today for assistance.
I have been a Merger and Acquisition advisor for 25 deals in the last four years, and helped many others develop succession and exit plans.
The best version of you includes what to do with your business when you retire or cannot work anymore!
Email Kevin kbaker@keinbakerinc.com about planning for your business future.