Where’s the Seller Tsunami?

The Wall Street Journal published an article this month titled “The Missing Boom in Small-Business Sales — An expected rush in sales of small firms by the baby boomer generation has yet to materialize.”

The article points out that despite predictions that a flood of private businesses would be coming up for sale as baby boomers reach retirement age, many of these owners are holding on longer than expected. We’re seeing the same thing here at Exit Strategies. We’re experiencing steadily rising deal flow, but not the massive seller tsunami that’s been predicted for the past ten years.

The article posits several reasons, all of which we agree with:

• The recent recession hit retirement asset values hard, causing many owners to invest additional personal funds in their businesses; therefore postponing retirement for those who plan to live off of their assets in retirement
• People are living longer and enjoy the challenge of working later in life
• Younger people seem to be less interested in taking over the family business (particularly when good jobs are plentiful)

We are definitely seeing more interest in selling (and stronger demand for) companies valued over $2.0 million dollars. Owners of smaller businesses seem to be holding on longer, perhaps because they also have fewer retirement assets to rely on.

So, the tide of exiting baby boomer owners is rising, but the crest of the wave is still approaching.