In the ongoing aftermath of the pandemic’s financial toll, we find ourselves in a business environment characterized by resilience and growth. According to Transworld’s Main Street Market Report, business acquisitions have surged by over 32% from 2021 to 2022. This resurgence brings promising prospects for prospective buyers. To delve deeper into this upward trend, let’s explore who is currently considering selling their businesses and which demographics are primed to make acquisitions.
Sellers on the Horizon
As one might expect, the primary demographic of sellers comprises the baby boomer generation. Born between 1946 and 1964, those on the later end of this spectrum are approaching retirement and are now setting the stage for their next chapter. It’s noteworthy that the last of the baby boomers will reach full retirement age in 2031, which is less than a decade away. Moreover, concerns stemming from potential economic downturns, labor shortages, and the omnipresent specter of burnout have prompted some boomers to contemplate selling their businesses sooner rather than later.
Yet, it’s important to note that not all baby boomers are rushing to cash out and exit the workforce. In fact, a recent study by the nonprofit Transamerica Center for Retirement Studies, in conjunction with the Transamerica Institute, found that 49% of baby boomers either plan to extend their working lives beyond the age of 70 or have already done so, defying conventional retirement norms. In addition, there is a large segment that suffered economically during the great recession, and the covid crisis and have yet to recover.
Another significant category of sellers in the current landscape consists of individuals keen on capitalizing on the robust business sales market. Some are looking to take a step back from entrepreneurship, while others sense that the timing is perfect to shift their focus to new and different business endeavors.
Who’s in the Buyer’s Seat?
So, if the sellers predominantly comprise baby boomers and those eager to leverage the thriving sales market, who, then, are the buyers at the forefront of this dynamic landscape? Two key groups emerge: those seeking an exit from corporate America to become their own bosses and strategic buyers.
The COVID-19 pandemic wrought transformative changes in how many individuals viewed the balance between work and personal life. The first group of buyers has scrutinized their corporate jobs during lockdowns and emerged with a fervent desire for more autonomy. They yearn to be masters of their own destiny, setting their own rules and deciding when to punch in and out. Consequently, these individuals are on the lookout for businesses considered recession-proof, with service-based opportunities taking center stage. By pursuing entrepreneurship, they gain greater independence and control over their work-life equilibrium.
This brings us to the second group: strategic buyers. These individuals are interested in acquiring businesses for strategic reasons. They might not have owned a business of this nature before and are primarily motivated by the prospect of enhancing their competitive positioning. This could involve gaining complementary products, cutting-edge technologies, expanded customer bases, or broader distribution channels that promise cost savings, revenue growth, market expansion, or other strategic objectives.
Strategic buyers can encompass larger corporations looking to acquire smaller businesses to broaden their offerings or consolidate their industry presence. They may be eyeing a company as their entry point into a new market or as a means to eliminate a competitor. Their focus is on the long-term benefits the acquired business can provide, rather than just immediate financial returns.
Even with certain economic conditions evolving in 2023—such as rising interest rates and inflationary concerns—data related to the speed of sales, pricing, and deal volume continues to trend upwards, mirroring the trajectory observed in 2022. These positive indicators bode well for anyone contemplating selling their high-quality business in the coming months.
Transworld’s team of seasoned business advisors is ideally positioned to assist both buyers and sellers in navigating this intricate landscape and harnessing the historic surge in mergers and acquisitions activity. Don’t hesitate to reach out to us to explore your options for purchasing a business or to ascertain the value of your business using Transworld’s comprehensive business valuation calculator.
For more on selling and buying a business in Tampa Bay contact Tampa Bay Business Broker Michael Shea of Transworld at 321-287-0349 or email him at mike@tworld.com .