Predicted Massive Boom in Private Business Sales

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The Wall Street Journal today had an article titled “A Missing Boom in Small-Business Sales.”  The article began:

Despite predictions that a flood of small businesses would be coming of for sale as owners of a certain generation ready themselves for retirement, many are holding on longer than expected.

I recently wrote a post titled “The $4 Trillion Opportunity for Business Ownership Transition.”  That post attempted to quantify the current dollar value of businesses that are likely to transfer over the next decade or so.  The post also noted that the massive wave of ownership transitions that some have been predicting for more than a decade simply has not materialized yet.

The Wall Street Journal pieced together a number of possible reasons the transition wave has not occurred:

  • Some baby boomers seem to have a tough time letting go of the reins to their companies.
  • Younger family members aren’t interested in taking over.
  • Some owners are working longer because they have not recovered from the recession yet.
  • According to Judy Habib of KHJ Brand Activation, “Baby boomers are so not dead yet…Do you really think we will fade off into the sunset? No.”
  • Business owners are in good health and enjoy working.
  • There’s more room for growth and boomer owners want to grab it before selling.

I’ll add another reason – procrastination.

The article points out that it takes a long time to get a company ready for sale, and that many owners need to be focused on this while they are waiting.  It does take time to prepare a business for sale.  See my posts:

Whether there is a massive selling boom or not, ownership and management transitions are inevitable.  It is okay for owners to wait on their transitions if they are planning for them and putting the necessary management and ownership transition pieces in place while they enjoy the ride or procrastinate.

Whistle while you work, and be well!

Chris

Corporate Finance for Private Business

Contact me to discuss your needs in confidence about:

  • Buy-Sell Agreement Pricing
  • Any Other Current Valuation or Transactional Requirements
  • Dividend Policy for Your Closely Held or Family Business
  • Shareholder Liquidity Using Leveraged Share Repurchases or Dividend Recapitalizations
  • Ownership or Management Transition Issues
  • Board Presentations/Discussions re Shareholder Liquidity and Ownership Transition
  • Need a speaker

901.685.2120 | mercerc@mercercapital.com

Books

Ownership Transition Bundle

In the Ownership Transition Bundle, receive both print books of Unlocking Private Company Wealth and Buy-Sell Agreements for Closely Held and Family Business Owners  in addition to complimentary PDF resources of The Buy-Sell Agreement Review Checklist and The Buy-Sell Agreement Checklist for Shareholder Promissory Notes.

Unlocking Private Company Wealth

Written both for business owners and advisers to business owners, Unlocking Private Company Wealth can help you turn your business (or your client’s business) into the liquidity-creating vehicle it needs to be for you (or your client) to become independent of the business and truly free to sell it, stay with it, or transition it to others of your choice.

Buy-Sell Agreements for Closely Held and Family Business Owners

Buy-Sell Agreements for Closely Held and Family Business Owners is your guide for understanding what your agreement says from business and valuation perspectives. The book includes a comprehensive and yet understandable roadmap for business owners and their advisers. It discusses the three major types of buy-sell agreements – fixed price, formula and valuation process agreements.

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