Coming Soon: A Flood of Baby Boomer M&A?

An M&A survey by ACG New York noted that 74 percent of respondents (mid-market dealmakers) anticipated a slight uptick in baby boomer business sales.

24 November 2014


Are you a retiring baby boomer with a business you’ll be selling off in the next decade or so? You won’t be alone, by any means, says Joanie Gable, a guest columnist in the Birmingham Business Journal. In fact, there will be a glut of smaller boomer-owned companies headed to the acquisition block — making your task all that more challenging.

On the other hand, if you are looking to invest in or acquire a company, it will be a buyers’ market (sorry for the plug, but you can always check out the company listings on Intralinks Dealnexus). Consider these statistics about the coming “baby boomer tsunami”:

  • The boomers own, in total, about 12 million businesses
  • About 70 percent of these companies won’t go to successors and will be sold off
  • Through 2029, there will be more than 378,000 businesses that will go on sale
  • Currently there only 24,000 enterprises for sale
  • Less than 20 percent of available businesses will find a buyer

And an M&A survey by ACG New York, a trade association, noted that 74 percent of respondents (mid-market dealmakers) anticipated a slight uptick in baby boomer business sales in the next three to five years. And 18 percent believed there will be a dramatic sales increase in the near future.

Planning Your Business’ Sale

The Journal column suggests thinking ahead to ensure there is a successful handoff to a buyer. Decide up-front what the goals are and then create a plan. The author suggests you:

  • Realistically calculate the business’ current value.
  • Get a professional to look at your performance and assist you in planning how to make the company grow, while there is still time to do so. Each dollar of bottom line profit will be multiplied from five times to 20 times in the sales price.
  • Select members of a “success team” to help with the sale. Among the people to include are your own managers, an attorney and then, later, an investment banker or M&A company.
  • Monitor the team’s progress towards each milestone. The CEO must stay focused on all the team members and their tasks.

To effectively market your company, we also recommend that you join an online deal sourcing network. It can quickly let you connect to an extensive range of qualified M&A mid-range buyers.

Buyer Due Diligence A Major Challenge

The most formidable M&A hurdle for the seller will most likely be the buyer due diligence process, suggests the author. In this phase, the buyer will come up with a long list, containing hundreds of questions about the business. The queries may cover “anything and everything the business may have ever said, done, considered, reviewed, etc.”

Expect the due diligence process to be exhausting, and intrusive. But if you are prepared for it, you can make due diligence go more smoothly. You may also consider using a virtual data room (VDR) to streamline the deal process and get greater control over the sale.

M&A take a lot of time and effort — so the better your tools, personnel, and processes, the more likely you’ll find success, even in a buyer’s market.

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