Silver Tsunami – Baby Boomer Business Owners Need the Assistance of Business Brokers

In recent years, there have been several articles about the coming “silver tsunami.”  Meaning the millions of Baby Boomer business owners that will be retiring in the next decade or so and need to sell or transition their business to a new owner.

Christopher Nicholas, of Shields & Co., at ACG Boston’s DealSource Select, says about 60% of the 15 million privately held businesses in the U.S. are owned by Baby Boomers – individuals born before 1964.  That means, about 9 million privately held businesses will either close, be handed down to a family member or brought to market in the coming years.

To get a feel for the opportunity this presents for business brokers, let’s do some quick math.  Let’s say 50% of the 9 million businesses will be transferred to a family member, employees or cease operations.  That means 4.5 million Baby Boomer business owners will seek to sell their business.  It is often estimated that 50% of business transfers are never reported – very believable number.  So, let’s take 50% off the 4.5 million to leave 2.25 million businesses that a sale would likely be reported. For the larger businesses, those considered of M & A sized transactions, Dealogic data from 2007 to 2016 (ten years of deal data) indicates 100,373 M & A deals were announced – only about 10,000 deals per year.  BizBuySell, the largest online business for sale listing site, indicated in their third quarter Market Insight Report that 2018 is on track to be another record-breaking year of business listed and reported sold through their site.  With a strong fourth quarter, around 11,000 small businesses will be sold in 2018 with a median sales price of $249,000.  Adding the average of 10,000 larger M & A transactions to the 11,000 smaller businesses sold, we get 21,000 businesses sold in the U.S. per year.

Given the estimated 2.25 million businesses owned by Baby Boomers that will probably be brought to market, with only 21,000 businesses sold tracked yearly,  It would take about 100 years at that rate to sell 2.25 million businesses. Of course, Baby Boomers will not be able to hang around for another 100 years until their business sales.  Let’s say these 2.25 million businesses are brought to market over the next 20 years.  That still means 112,500 businesses – owned by Baby Boomers – brought to market each year for the next twenty years – lot-of-businesses.

This large number of Baby Boomer business owners seeking to sell their business creates an excellent opportunity for business brokers – individuals that help people buy and sell businesses.  There are no real accurate statistics for the number of business brokers in the U.S.  The Great Recession led to at least half of the business brokers closing shop – retiring or moving on to another career.  As I speak with individuals across the U.S. familiar with the business brokerage industry, I hear estimates of maybe 2,000 to 3,000 total full-time business brokers in the U.S. today. Even 3,000 full-time, hardworking business brokers cannot handle 112,500 new listings each year. As you can see, there is now and will continue to be a high demand for qualified business brokers to help Baby Boomers transfer their business over the next couple of decades.

Having started my business brokerage career in 1995, still practice business brokerage full-time and leading the School of Business Brokerage, you might expect I think it is always a good time to become a business broker.  However, as they say, “the numbers don’t lie.”

An important aspect of a business brokers service is to help the business owner receive the highest price and best terms for their business: Baby Boomers – older folks, needing the assistance of a trained business broker to help them turn the value in their business into retirement funds.  Of my current personal business listings, every owner I work with is relying on me to help them sell their business and start the Retirement Chapter of their life.

If you have been considering becoming a business broker, now is the time to get started.  Moreover, the School of Business Brokerage is here to help with training, mentoring and resources.  Check out our training programs (in class, online and webinar based) designed to get you off to a fast start.  Got a question or want to learn more about a business brokerage career, give us a call 336-618-7842.