View on Valuations: Boomers

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If you were listening closely enough, that faint sound you may have heard recently is the proverbial pendulum swinging in a new direction.  Those of us in the business valuation and merger & acquisition/business brokerage world have found comfort in the fact that the “Baby Boomer bubble” would save us in the long run. 

Millions of business owner born from 1946 to 1964 would be exiting their businesses by the thousands each day and that outflow of wealth would need our help. First, the business would need to be valued and then an exit planning professional would be needed to find that younger generation of buyers ready to shoulder the mantle of business ownership.  “Just be patient” we told ourselves at countless conventions, webinars, educational events and other gatherings where we planned for our future.   

I believe we as a financial services community serving the exiting and aging business owner are wrong.  I don’t see the rush from the younger generation to buy many of the businesses being offered by the Baby Boomers – ”just not high tech enough, work is too hard and not really sure that business type will survive” are among the reasons being given for the next generation to stay on the sideline.  And from one who was born smack in the middle of the bulge, I know we are not getting any younger. That means realizing a smaller golden egg just when we counted on being home free of our business ownership responsibilities. 

So, how does that income forecast look now Mr. and Mrs. Valuation Professional when the outlook for a “real” buyer for the aging business owner’s operation becomes more remote? Is that industry risk premium still where it was, or has it taken a turn?  Hopefully I am wrong, but I believe the Baby Boomer bulge in the pipeline may have an unhappy resolution for many of us. 

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