Sell Your Business Before the Market Changes

When we first started the Summit Group in 2005 , our market research indicated that there would be a tidal wave of business sales as baby boomers reached retirement age. The logic was as follows:

• Small to medium sized enterprises (“SME’s) (defined as those businesses with less than 500 employees and annual revenues of less than $50 million) accounted for 99% of all businesses in Canada.
• There were approximately 1.5 million SME’s in Canada.
• The Boomer generation (persons born between 1946 and 1964) was projected to start retiring and this generation owned over 70% or approximately 1 million of the SME’s in Canada.
• Of the 1.5 million SME’s in Canada an estimated 41% were projected to be sold in the next 5 years and 70% were expected to sell in the next 10 years.
• There were approximately 171,000 SME’s in British Columbia, and based on the above statistics 70,000 of these businesses were projected to sell over the next 5 years and 120,000 were forecasted to sell over the next 10 years.

The message to business owners was to sell now, before the flood of businesses for sale outnumbered the number of buyers chasing deals and prices fell accordingly.

Although there was a vibrant market, with plenty of buyers and  readily available financing at good rates but there was not the the volume that that everyone anticipated. In part the reason was that to the current crop of baby boomers, 55 wasn’t that old; in part, because business owners required their business to maintain their lifestyle; and in part, because many business owners enjoyed running their business. Finally, the recession of 2008/9 brought business sales to a virtual halt.

It is now 10 years later and the baby boomers are 65 to 75 years old and approaching traditional retirement age.  There is now a vibrant market again with plenty of buyers chasing deals but experts are now warning of a Tsunami of business sales from aging business owners that could significantly reduce valuations over the next few years as more and more businesses are put up for sale.

In an article in ProfitGuide.com, Doug Robbins, founder and president of Robbinex Inc., a nationwide business brokerage based in Hamilton, Ont., says that;

as soon as the North American economy regains predictable, stable growth, pent-up supply could flood the marketplace. As thousands of owners confront too few buyers, the winning companies will be those that start planning now to create the conditions for success.

The message is clear. The time to start planning a viable succession for your business is now.

Contact the Summit Group for a free no obligation consultation and we will provide you with the advice and the tools to ensure that you make the best decisions possible.