The imminent “silver tsunami,” the retirement of numerous baby boomer business owners, is expected to herald significant changes in the global business landscape. This mass retirement stirs concerns amongst investors and would-be sellers due to potential disruptions. Despite this, there’s optimism surrounding this change as it presents promising prospects for young entrepreneurs.
Data from the Small Business Administration predicts that about 10 million boomer-owned companies will transition ownership between 2019 and 2029. This massive shift signifies over $10 trillion wealth transfer, reshaping the American small businesses landscape. Navigating through this transformation would be no easy feat, making diligent planning and well-constructed financial structures key in securing a smooth transition.
Forrester’s study ratifies this trend, as it reveals that 64% of global small business buyers are people born after 1980. This percentage is expected to rise, with 66% of business brokers predicting an upswing in buyer activity by 2024. Concurrently, 75% believe that the number of owners wanting to sell will rise beyond 2023 projections.
Silver tsunami: A golden opportunity for young entrepreneurs
The tech-savviness of post-1980 individuals is also driving an interest in digital enterprises, indicating a brighter future for the small business sector.
Following a 10% year-on-year increase in the first quarter, it’s expected that the deal-making climate will further accelerate by 2024. Seller-financing is becoming pivotal in this trend, offering lower interest rates and a more flexible approval process. New-age entrepreneurs are anticipated to contribute innovative strategies, potentially enhancing business efficiency and profitability.
Codie Sanchez, Founder, and CEO of Contrarian Thinking, noted that the silver tsunami is yet to peak. About 10 to 11 million small businesses are for sale in any three-year period in the U.S, with 60% of baby boomer business owners seeming open to seller-financing. This trend presents a phenomenal opportunity for younger, budding entrepreneurs who can acquire these businesses and instill their innovative ideas.
Sanchez advises business owners to conduct thorough due diligence before any negotiations. Even though this might seem intimidating, he stresses this is a regular part of the process and encourages the younger generation to embrace this as an opportunity. Initiating a well-paced and meticulously planned exit strategy is key to ensuring a seamless transition. Santachez calls on the younger generation not to view these processes as obstacles, but as unique growth and advancement opportunities.
