24 Aug Are Your Baby Boomer Clients Really Ready to Sell?
In our recent interview with Darrell Arne, Founder and President of Arne & Co. in Albuquerque, Arne covered a great deal of interesting ground. In this article, we’ll review some of Arne’s top recommendations for business brokers.
Your Baby Boomer Clients
Arne points out that there is an epic financial shift lurking on the horizon. Specifically, he is referring to the amazing amount of wealth that will be transferred from the Baby Boomers to the next generation within the next couple of decades.
The simple fact is that trillions of dollars of wealth will be transferred. As Arne points out a truly staggering 12 million Baby Boomers currently own, or have owned, a business. The opportunity that this transition of wealth represents for business brokers is hard to overemphasize.
Arne notes that the COVID-19 pandemic has most definitely served as a “wake-up call” for Baby Boomers. Yet, this pandemic stimulated activity has barely scratched the surface. In Arne’s view, as the pandemic continues, any increase in uncertainty will only serve to propel more Baby Boomer business owners onto the market.
Summed up another way, business brokers may very well be looking at a historically unique opportunity. In order to take advantage of this opportunity, business brokers should constantly be thinking about how serve their clients in the best way possible.
After trust is built, it is possible to delve deeper. For Arne, one of the best moves a business broker can make is to evaluate whether or not a business is ready to be sold. In many situations a business may not be ready to sell.
In this case, the business owner should hold onto the business and build it. In some situations, the best move may be to try encourage the owner to grow the business from a small business to a mid-sized business.
Creating value through the M&A process can greatly benefit the transitioning business owner, and you should focus on showing that to your clients. When speaking to your clients, be sure to emphasize that anything that benefits the business owner will ultimately add value to the business and can make it easier to sell.
As a business broker or M&A Advisor, you need to think about what a given business is really worth and whether or not the business owner would be better off growing the business before selling. You should also consider various other issues including the tax implications, how difficult it will be to find new management be and the emotional aspects of selling.
The process of buying and selling businesses is complex. As Arne notes, business owners who decide to sell are going through a life-changing event. They are transitioning from a life that they’ve known for years, if not decades, and are moving into the unknown. If you work with business owners who don’t know why they are putting their business up for sale, then the bottom line is that they may not truly be ready to sell.