In one of our latest blog posts, we discussed the impact that the Baby Boomer Generation has and will continue to have on our economy. This is especially true when it comes to their retirement. A study from Lindquist shows that since 2011, 10,000 Baby Boomers are turning 65 every day. This trend is set to continue for 12 years.
Baby Boomers own 65% of all privately held companies, and although many of them are delaying retirement for financial reasons, the overall increase in their rate of retirement will lead to a related increase in the sale of small businesses.
If you’re a Baby Boomer with a privately-held company, it’s imperative that you create a sound exit strategy for your retirement, particularly if you plan to sell. Here’s what you need to know.
There are approximately 4,000,000 businesses owned and operated by Baby Boomers. Nearly all of them are identified as small businesses (fewer than 500 employees) and are sole proprietorships or small corporations. These businesses are considered to be in the lower middle market with annual revenue anywhere from one million to one hundred million dollars.
Baby Boomers’ Business Sales
While some Baby Boomer-owned businesses will close their doors when their owners retire, an estimated 65-75 percent of them will be put up for sale over the next ten years. Research indicates that during the next 15 years, there will be the largest intergenerational transfer of private businesses in our country’s history. Some researchers have predicted that more than $10 trillion in business assets could be transferred before the year 2030. If business sales were consistently spread over the next 15-year period, that would result in almost 267,000 businesses being transferred every year.
How to Sell
If you’re likely to be retiring within the next 12 years, selling your business is a viable option to preserve its legacy and help you to turn your equity into liquidity prior to your retirement. If you choose to sell, one of the first steps you should undertake is to understand what your business is worth. You should know the best-case scenario, worst-case scenario and the path you need to pursue to get there.
For further reading, we encourage you to read our related blog posts:
Our team at Symmetrical Investments can help you as you prepare for the next phase of life. Contact us today to get started.