Baby Boomers: Beware!

During 2022 we have witnessed a pent-up surge in business buyer and M&A activity as a response to COVID recovery in the economy. One of the most often-asked questions I get is "how long will this boom last"? Good question. Baby boomer business owners are starting to worry (as they should) because much of their wealth is concentrated in the value of their business. When to sell is all about timing. And for baby boomers, time itself is something you are running out of rapidly. We all know that markets run in cycles. And we all know people who missed the window of opportunity, who fell victim to the 2008 meltdown, or the dotcom collapse, or any number of market reversals.

And today, we are "11 years into a 7-year bull market" cycle. Which means we are overdue for a major correction. Does that worry you? It should, because when markets turn, it gets ugly. Fast. You could easily lose 40% of your company's value in just the first 6 months. Half the buyers simply disappear--and it gets worse. You may not be able to sell your business at all. On average, it takes seven years for market values to recover. Do you have that much time left?

Then there is life itself. Sometimes you see wealth just go up in smoke. It can be heartbreaking to watch. Here's a case of two owners I knew who both had untimely deaths--one a manufacturer of specialized computer assemblies and another who owned a large insurance service business, both located in the Southeast, both in their early eighties, with no exit or succession plan. Between them their businesses were worth at least $70 million. One turned down an offer of $60 million all-cash for his principal business, and then died suddenly 14 months later His heirs, who were not active in the business, eventually sold for pennies on the dollar. The other owner also died unexpectedly, and his poor wife ended up with nothing. Don't let that happen to you! While the world crawls out of the pandemic, with war fever in the Ukraine threatening to spread, and hearing endless happy talk from our politicians, we can't ignore one immutable fact: we are overdue for a major correction. And how long can our government spend inflated currency like there is no tomorrow?

So, just for your own protection--boomers need to think about calibrating the market. Find out what your business is worth. Often it's more than you think. Then, of course, the goal is to get a great offer and price for your business. Any of these benefits will be worth your limited time. Boomers beware--you don't want to miss a good buyer market for your business that you may never see again.