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Wave of Businesses for Sale Linked to Baby Boomers

Over the next two decades, experts say that the U.S. can expect a record wave of businesses for sale. According to some, the size of this wave is so great that it can be more accurately described as a tsunami. And the cause of this wave? America’s retiring generation of Baby Boomer business owners.

Baby Boomers already make up an outsized portion of the U.S. population. As a result, America is expected to see a record-setting generation of seniors as the Baby Boomers retire.

But for the number of Baby Boomers nationwide, this generation has an even larger presence among business owners. And as more Baby Boomer business owners opt for retirement, this will trigger an unprecedented number of businesses for sale.

Baby Boomers Make Up a Large Share of Business Owners

To understand the scope of the issue at hand, let’s quickly look at some data from the U.S. Census Bureau. According to data from 2018, there are now more than 70 million Baby Boomers in the U.S., more than 20% of the national population.

The share of Baby Boomers in the U.S. is a big reason why the average age of a U.S. resident is now 38.2 years old. That’s higher than any other time in the country’s history and a full ten years older than in the 1960s and 1970s.

These figures, however, don’t even start to tell the story when it comes to small business owners. One 2019 study found that 57% of small business owners in the U.S. are currently over the age of 50. Others have found that, even now, Baby Boomers start businesses at a higher rate than any other generation.

But nobody can run a business in perpetuity. As more and more Baby Boomers start to retire, we’ll see more and more of these businesses for sale.

In fact, figures released by the California Association of Business Brokers project that there will be more than 12 million Baby Boomer businesses for sale or bequeathed within the next two decades. The total value of these businesses? More than $10 trillion.

What Makes These Businesses for Sale Different

As we see more Baby Boomer businesses hit the market, it’s worth thinking about what makes this wave of businesses for sale unique.
Earlier this decade, before the Baby Boomer wave started, some experts worried that the glut of businesses for sale would result in an overabundance of supply, triggering a decrease in business values. But over the past few years, as the first Baby Boomers have reached retirement age, we’ve seen the expected increase in business listings. But there’s been no corresponding decrease in business values.
During this time, however, we’ve seen other distinct trends among this first set of sales.

In particular, many brokers have noted how Baby Boomer business sellers have put an increased emphasis on finding the right buyer. Many of these business owners are not simply trying to secure retirement incomes — they’re also trying to secure a strong future for their company.

As a result, they tend to be much more selective about who buys their business. What’s more, because they’re in less of a rush to sell, they can wait out unsatisfactory bids to find the right buyer. And when they’ve found the right buyer, they’re more willing to assist during the ownership transition. By lending a hand during the transition, they ensure their business is in the best possible position to succeed moving forward.

Find businesses for sale with help from Murphy Business Brokers! Call (888) 561-3243 today to connect with your local office and request a free consultation.

How to Properly Valuate Businesses for Sale

When you’re planning to sell a business or looking at businesses for sale, a detailed business valuation will be crucial. Yet many business sellers and buyers underestimate the importance of valuations, or they misunderstand the valuation process.

So let’s quickly set the record straight.

If you’re selling a business, a valuation has two important functions.

First, it gives you a sense of how much you’ll get for your business. Without a proper valuation, many business owners have an inaccurate sense of their business’s worth. In these cases, it’s better that owners find this out early — before listing their businesses for sale.

Second, it helps increase the chances of selling your business quickly and at maximum value. Business buyers are much less likely to negotiate pricing than you might expect. If they see a business listed for more than it’s worth, they’ll simply move onto the next listing.

So if your business is overvalued, your listing could stagnate. That extends the time it takes to sell your business. And it can ultimately lower the market value of your business.

If you’re buying a business, the main benefit of valuating businesses for sale should be obvious. When you buy a business, you want to make sure that you’re paying fair value.

But with a proper valuation, you’ll also get a better sense of what returns you can expect from your investment. A professional business valuation will include detailed cash flow projections, giving you a detailed look at how much value the business will generate over the next several years.

Now that we’ve covered the importance of valuating businesses for sale, let’s look at a few different valuation strategies.

How to Valuate Businesses for Sale

If you’re selling or buying a business, there are a few different ways that you can perform a valuation.

Basic Business Valuation Strategies

The simplest strategies used to valuate businesses for sale tend to also be the most common. Examples include:

- Appraising a business’s assets and liabilities to calculate value
- Applying a standard multiplier to average annual revenues
- Applying a standard multiplier to average annual profits

Because of their simplicity, these strategies are popular with independent business sellers and buyers. They’re also common among inexperienced and amateur business brokers.

However, these strategies fail to account for many of the things that actually make a business valuable, particularly after a transfer of ownership. Additionally, they aren’t always an accurate reflection of the market value of businesses for sale.

Professional Business Valuation Services

Given the failings of basic valuation strategies, we strongly recommend hiring a professional business valuation service if you’re selling or buying a business. This should be someone who’s qualified to valuate businesses for sale and who is certified by organizations like the Appraisal Foundation and the Institute of Business Appraisers.

A professional business valuation will consider things like net assets and annual cashflow. But it will also cover a number of additional factors — factors that are much harder to quantify and measure without a valuation specialist.

These include things like the management structure of the business, and whether it’s suitable for operations under new ownership. Many small business owners develop their businesses in a way where, without the owner, the business can no longer operate.

A qualified valuator will know how this impacts the value of a business for a new owner. But this kind of concern will slip by if you apply a basic valuation strategy. And this is only one of the many ways that a valuation specialist can valuate businesses for sale more accurately!

This covers the investment value of a business. But experienced valuators also know how to assess the market value of businesses for sale.

In some cases, market value may be a different figure from the investment value of a business. Even so, this number will be critical whether you’re selling or buying a business. If you’re selling, you’ll know how much you can reasonably expect to earn from the sale of your business. If you’re buying, it will tell you whether you’re paying a fair rate, based on market indicators.

Selling a business? Looking for businesses for sale? Call Murphy Business today at (888) 561-3243 to connect with a local business broker!

Why Hire a Broker to Find Businesses for Sale?

With the proliferation of business listing websites, it’s become much easier to find businesses for sale. Because of this, some first-time buyers assume there’s little need to hire a business broker when buying a business.

That can be a serious mistake. While these websites have made it easier to find businesses for sale, the confidential nature of business sales keeps many of the best listings hidden from public view. Additionally, finding and buying a business remains a tricky, complicated process, particularly for first-time buyers.

Without a broker, you may struggle to find the right fit. And even if you do, you might have trouble closing the deal. So, before you start to look for businesses for sale, here’s why it’s a smart idea to hire a business broker.

Murphy Business helps business owners sell their business.

How Our Business Brokers Will Help You Find Businesses for Sale

We’ll Help You Understand What to Look For

A number of business buyers know what they want out of a business. But when they’re looking at businesses for sale, they’re not sure what look for in a business to make that happen.

At Murphy Business, our brokers are experts at determining what businesses have to offer, and how to read business listings to gather this information. So, when buyers need assistance finding businesses for sale, we know what to look for.

At the same time, we can use our experience from other transactions to help uncertain buyers narrow down their list of options. Based on your situation, skills, interests, and resources, we can recommend which types of businesses will be the best fit for your needs.

We’ll Help You Find Higher Quality Listings

When you’re searching for business listings on your own, you’ll face a number of hurdles. First, you might not know where to find the kind of listings you’re looking for. Second, you won’t have access to some of the top listing networks. Third, you’ll be less efficient than a broker, which means you’ll find fewer listings in the same amount of time.

By hiring a business broker to find businesses for sale, you can find better listings than if you were searching independently. Brokers will know where to look, will have access to industry networks, and can leverage their skills to find top listings in a shorter period of time.

We’ll Help You Avoid Easy-to-Make Mistakes

Buying a business is a tricky and expensive process. Unfortunately, it’s all too easy for buyers to make unforced errors and mistakes. Here are just a few examples:

- Missing telltale warning signs of a high-risk business listing
- Accidental confidentiality breaches before a business is sold
- Procedural mistakes in financial or legal paperwork

With a business broker, you won’t run the risk of deeply expensive but easily made mistakes. An experienced broker will know which pitfalls to avoid. At the same time, they’ll have a proven system to ensure that I’s all get dotted and that T’s get all crossed.

We’ll Help You Negotiate and Close the Sale

A business broker won’t just help you find businesses for sale. They’ll also help you negotiate terms of sale and close the transaction.

Brokers have experience on both sides of business sales, so they know how to accommodate any specific concerns or requests from business sellers. If you hit a roadblock during negotiations, a broker can often find a workaround well-suited to both parties.

Hiring a business broker can also refer you to legal and financial specialists that you’ll need when purchasing a business. They can also help you acquire purchase financing, through referrals to traditional sources or through an SBA loan.

We’ll Save You Time, Effort, and Stress

Finding businesses for sale takes less time, less effort, and less stress with a business broker’s assistance.

On your own, you’d spend who-knows-how-many hours going through listings. That’s time and energy that you could direct to other pursuits.

At the same time, searching for businesses for sale can be a deeply stressful process. Without a broker’s expertise to rely on, you may worry about settling for a less-than-perfect business. Or you might fret about making small mistakes with big costs.

With an experienced business broker, these concerns fade into the background. By conducting the legwork of your search, a broker will spare you the time and effort that it takes to find great businesses for sale. At the same time, you’ll enjoy peace of mind, knowing that your search is being conducted by an experienced expert.

Start searching for businesses for sale with an experienced business broker! Call (727) 725-7090 to connect with your local Murphy Business office.