Recently I posted a LinkedIn inquiry about selling businesses for retiring baby boomers. The group where I posted is all about businesses for sale, brokering businesses, etc. A grand debate followed with various responses. Following is the original posting:
“As we start into the era of baby boomer retirements, owners wanting/needing to sell, what strategies brokers can implement to serve buyers and sellers well, maintaining the broker’s robust practice? ”
The range of responses included the necessity of pricing the businesses more strategically – lower, because the supply will increase and the demand will decrease. One response suggested that with larger businesses there are plenty of qualified buyers and thus no problem. One person spoke to a reality that even distressed businesses might sell because there are buyers who want a turnaround. Yet another spoke to the possibility that some highly desirable locations, such as Atlanta, may fair better than other locations.
Michael Coyle responded “I think the number of sellers will increase due to demographics and less of a change for the number of buyers. I don’t see a collapse of the market but the industry already has pretty poor performance as a whole. I hear from industry sources only about 1 in 5 main street businesses offered for sale actually sell and that on 3% of all buyers who represent themselves as business buyers actually buy a business.
My point is that sellers will need to prepare more to be successful in selling their business and an increasing number of buyers are looking for different value attributes in business they want to own than exist in many business offered for sale today. ”
I, Priscilla, really appreciate Michael’s comments about the need for a seller to be better prepared than ever before – positioning better than others on the market.
Further, I see a far greater complexity within brokering to meet needs of retiring baby boomers. It may not be merely the question of over or normally priced businesses for sale. I do not necessarily think that more businesses will be distressed. I think there may need to be new strategies to have businesses not merely close because, regardless of current performance, there may be too few business buyers.
My husband and I have routinely been in Key West in the winter-spring of each year. There is a strategy of a single owner of multiple, unique retail stores. Is it possible that as boomers retire we might, as wise brokers, look increasingly to consolidation rather than focusing on single business sales?
Perhaps all of this, increased retirees, fewer buyers, needs/opportunities for consolidations, potential required lower prices will lead us (brokers) to new strategies. What might all of those strategies be?
I know that buyers who approach me are more likely to be introduced to the concept of a multi-business purchase. More often I am suggesting to sellers to get their house in order in advance of listing and offering the support of experts in this arena.
It is all worth considering.