Baby boomers own 67% of the privately-held businesses in the U.S. Just over 4 million companies, worth an estimated $10 trillion USD in equity.
Here’s the thing about Baby Boomers, there are lots and lots of them all around the world. Born between 1946 and 1964, the majority are at or nearing retirement age.
Sadly many Boomers can’t afford to retire yet – they’re still recovering from the economic setbacks that many equity owners experienced in the 2008-2009 recession. What was expected to be an orderly-exit by the Boomers has been delayed at least a decade, with most Boomers sticking around to rebuild their nest eggs. Yet every Boomer continues to age, regardless of the state of their retirement assets.
Economic strategists estimate that a bubble of privately-held small & mid-sized businesses (SMB’s) has been quietly forming for years. As the word gets out that a “buyers’ market” for small businesses is already forming, it’s anticipated that large numbers of Boomer-owners will rush to sell their businesses.
The net results will be a vast inventory of “for sale” enterprises, rapidly falling strike-prices, and increasingly desperate seller behavior.
The private equity world believes that most of these private businesses for sale during the imminent buyer’s market will never transact. Hold onto your seat… an estimated 80-85% will not be attractive enough to equity buyers to even garner an offer, because the owners had perpetually drained the cash out of their businesses over the prior decades.
Let’s do the math… an estimated 55-60% of privately-held SMB’s in any current industry vertical will not sell, instead simply locking the door one day and never coming back. “Asset sales” will abound, in what is expected to be a continuous bottom-feeding frenzy.
Savvy private-equity investors know that while asset acquisitions may initially be cheap, they require massive amounts of work, additional resources and time if the goal is to rehabilitate and strengthen the business to re-enter the competitive market. There are many other equity investment models worth considering, each with their own benefits and costs.
Which investment-growth strategy is best for your organization? Herzberg Smith & Co can help you define and successfully execute a unique M&A strategy, accelerating operational and financial results beyond your industry’s norms.
Across industries, over 70% of M&A’s significantly fail to deliver on their pre-transaction goals and objectives. HS&Co has the proven experience and tools to help our clients succeed far beyond their industry success rates.
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