In the next 5 years more than a half of million baby boomers are set to retire and sell their business. Many of these baby boomers have no succession plans in place or are faced with family succession that does not fit the vision or goals of the successor. With that said, many small businesses are at risk of ending their legacy by simply shutting down without finding a buyer who is able to carry it on. The good news is that it’s not too late! The influx of Baby Boomer businesses for sale will in fact create a buyers market and put a downward pressure on valuation, however, if you begin planning today, you can definitely mitigate this risk and ensure that you maximize the selling price of your business 3-5 years from now. Moreover, it is highly recommended that you are aware of what not to do. Here are seven common mistakes Baby Boomers tend to make when trying to sell their companies:
- They have not figured out who they are, what they want and why.
- They have not built a sellable company.
- They have not prepared themselves or their company for the transition.
- They have not received the right kind of help.
- They have not thought about what they owe to their employees and investors.
- They do not understand the buyer’s intentions.
- They do no know what to expect before, during and especially, after the deal is made.
Sellers who make these mistakes will have difficulty receiving the right offers or the price they hoped for.
As previously mentioned, the influx of businesses for sale due to the high amount of retiring Baby Boomers, will put a downward pressure on selling prices and valuations. Therefore, this will create a buyer’s market only for Boomers who have a clearly thought out succession plan and are wise enough to avoid these seven common mistakes. Proper preparation will greatly increase the chances of a successful exit.
If you’re looking for more advice and guidance during the buying or selling process, we highly recommend downloading this FREE eBook:
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Source: Parts of this blog were referenced from David Israelson’s article “Business-transition tsunami coming for aging baby boomers”. Read the full article here.