Article by Eric Purvis, Director of TAA Planning.eric

 

 

 

 

Two questions:

  1. Do you own a business?
  2. Are you planning to retire in the next five to seven years?

If you answered no, thanks for stopping by and have a great day. If you answered yes, then there’s a problem you need to know about.

Over the next couple of decades, the Australian economy is set to experience an unprecedented number of businesses for sale. This is because baby boomer entrepreneurs are beginning to retire. The result will be a glut of businesses available for purchase, and the secondary result will be downward price pressure, making most privately owned companies lose value when sold.

The baby boomer generation has been one of the most entrepreneurial generations in history. There are now over a million business founders and independent contractors over 55 years of age. Here are some quick facts on the baby boomer age group in business.

  • The oldest of the baby boomers was born in 1945 and is now 70 years old.  The youngest of the baby boomers was born in 1961 and is now 54.
  • The trend of baby boomers selling their businesses will continue for the next 10-15 years.
  • Research shows us how baby boomer business owners plan to exit:
  • Approximately 30% of plan to sell their business to a third-party buyer.
  • Another 30% plans to sell to a family member
  • Another 18% plan to sell in some manner to current employees.
  • The remainder plan to close and liquidate the business.

Selling your business during the first half of the “baby boomer bubble” which was 2005-2010, gave the best chance of maximizing its value because the younger baby boomers retiring from corporate jobs were active buyers. In the latter half of the baby boomer bubble, which is now, these new entrepreneurs will also be looking to exit.

So now we know the problem, let’s talk about the solution: what do you do to maximize your business’ value? The solution is a strategic exit plan you can implement and execute over the next few years.

I’m curious – are you one of the baby boomer business owners or independent contractors planning to exit and retire within ten years? Drop me an email to let me know whether or not you’re working on your exit plan.