Baby Boomer Business Sell-Off: A Tsunami of Business Sales. How to Sell a Business.


Hi good to see you. There has been talk
for a few years now about a tsunami of business sales coming and that tsunami
is on the horizon and is heading our way. That’s what the experts tell us, so
let’s have a look at what do they mean? What is this business sales tsunami they talk about? NZ was just 3 years away from the biggest small business sell-off in the country’s history, as the first wave of baby
boomers prepared to cash in their decades of hard work for well-earned
retirement. In September 2008 when the global financial crisis hit all those
well laid plans for life after work had to be put on hold, as business owners
felt the impact of business profits suffering, and the value of their
businesses retreating. Many baby boomers simply put their retirement on hold. But
9 to 10 years later now, and with the economy recovering many are still behind
the counter and in their offices. Born between 1946 and 1964 or those aged between 50 and 70 approximately, this segment controls over 80 percent of the spend in New Zealand and owns more than half the country’s businesses, and
they’re about to retire. So in the last two years the number of those aged 65 and over has increased by 43,000 with the weighing heavily towards the older
end of the scale, and within this demographic 50,000 businesses are
expected to change hands every year over the next decade. Now that has an
estimated value of around three trillion dollars. So these figures point to a
generational change in New Zealand’s business ownership and future. The
outcome is that by 2020 a significant number of baby boomers will have, or will
be in the process of, transferring the ownership of their businesses, and it’s
estimated that 80 percent of baby boomers here in New Zealand will not
have completed any form of succession plan. There was always going to be a glut in the market when the baby boomers tried to sell their business,
and with the financial crisis compressing that into an even smaller
time frame, it’s being labeled tsunami. So where traditionally there’s been a
shortages of businesses for sale and an oversight supply of buyers, this
transition to a buyers market makes timing all more important for sellers.
Will we get pre-crisis prices again? Hard to know, but we were witnessing
businesses getting multiples four, five and six times profit, and now we’re
getting two three and four times profit. The baby boomer generation is going to
run out of time to effectively hand over their businesses to the younger generations, or to get the best sale price for their business. Fundamentally sellers need to prepare a succession plan. They need to create
options for producing a win-win outcome. And with the bulk of baby boomers
nearing their seventies, business owners should not wait until the last second to put their business on the market. They need to avoid that tidal wave, that
tsunami of sellers. A succession plan could take three to five years to put in
place and it’s typical that New Zealand business people don’t invite experts into their business until the very last minute. It’s the old she’ll be right,
number 8 wire effect for business owners in this country. Succession is really
about creating options getting a fair price at sale time is the outcome of
good processes, and it’s not an event for a business that in many cases is the culmination of a life’s work. Acting before getting lost is the best advice to those nearing retirement. Investing time consulting with the participants in
your succession plan, such as a business broker, a lawyer an accountant, that will
assist you greatly in realizing and generating a plan to leverage a
sustainable exit from your business. Do you think there’ll be a tsunami of
business sales coming? Or are business owners, are they passing their businesses on to their wives, their sons, their daughters perhaps family, extended family members, or the staff in the business. Let me know what you think. Do you think
there’s going to be a tsunami of business sales? Hey thanks for
watching appreciate it let me know in the comments below if you agree or
disagree with me. If you’d like to know more about selling businesses or
buying businesses you might want to consider subscribing to my channel.
Nice to see you, see you again next time

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