The predictions are everywhere:A tsunami of business sales is on the horizon poised to flood the marketplace with businesses for sale. And while there have been a record number of transactions completed over the last few years, it’s substantially fewer than were predicted. In September 2017, a Forbes article stated “Experts estimate that millions of baby boomer entrepreneurs will close or sell their business in the next decade.” In fact, some of the “business for sale” websites show that inventory is down from previous years and that prices are still increasing. Hardly indications of a surplus of sellers, right?
So, what is happening? Let’s explore some possible reasons for the delay in coming to market:
Business is Great
Many business owners have seen revenues and prots return after the “Great Recession.” Some of those owners are repairing their balance sheets by paying off debt, and some are just socking away money and enjoying the profits.
They Feel Good and Think They Will Live Longer
People are aging much better than they used to. Better diets, exercise, medications, and the overall idea “60 is the new 40” mindset is keeping people from selling their income streams too early.
They Want More Money
While their parents may have lived more frugally in retirement, today’s idea of retirement includes a more luxurious style of living, with more traveling, and overall, a more expensive lifestyle. Therefore, boomers continue to add to their retirement reserves.
It’s Hard to Make Money With Your Money
Low interest rates and “safe” passive incomes are hard to come by. That, combined with the higher costs of living, leads to sale proceeds not necessarily generating an annual income great enough to live on. Ah, remember 10 percent CD rates in the 1980s?
They Are Still Optimistic About The Next Few Years
Lower tax rates, less regulation, increased construction plans, growth in population sectors — whatever the reason — business owners are feeling good about the future and they want to cash in on it. Isn’t there an app for that?
Why plan ahead?
In today’s attention deficit society where things are ordered and obtained in an instant, people don’t plan like they used to. Unfortunately, this includes personal retirement and exit planning for their businesses. Will this hesitation to the business sale market last? Simply put, no. And I am not exactly sure what will ultimately spark the eventual wave of sellers. It might be rising interest rates, economic blips, individual health concerns or negative world events, but time marches on and there is no stopping the aging process. With that in mind, it may be time to get in while there still is a “seller’s market.”
Andy Cagnetta owns and operates
Transworld Business Advisors. He joined
the company as a sales associate and
later purchased it. Transworld is an
international franchise business and
franchise brokerage, with thousands
of businesses for sale and over 100
franchisees in the United States and
TRANSWORLD BUSINESS ADVISORS