In B2B CFO’s The Exit Strategy Handbook, we provide statistics that reflect an upcoming “tsunami” of businesses that will need to transition to new ownership over the next 20 years. We estimate that 378,000 businesses, on average, will hit the market annually over the next 20 years. Our conclusions are based on census data showing there are 28 million U.S. businesses, of which 43% are owned by individuals belonging to the Baby Boomer generation, of which 60% will eventually go to market as opposed to just shutting the lights off. By comparison, only around 10,000 businesses presently sell each year, according to Capital I.Q. So all indications are that the predicted business sale tsunami is real and is on its way.
Sonoma County Mergers & Acquisitions
Perhaps you are like me and are more concerned with the impact of the coming business sale tsunami on Sonoma County. I ran a search and found that there are roughly 18,000 business owners in Sonoma County who have registered on LinkedIn. Using the same logic from the national statistics sited above, there may be as many as 4,600 Sonoma County businesses that will hit the market over the next 20 years. That’s a staggering 230 Sonoma County businesses that will need to transition to new ownership each year.
Exit Strategies, a Petaluma-based merger, acquisition, and valuation services company, is feeling the spike in M&A activity first hand. President and founder Al Statz commented “Last year was a record year for transactions in the overall M&A market and for firms like ours. Our advisers are seeing more and better quality companies coming through our door than ever.” Statz goes on to say “Today’s market is clearly a seller’s market” but then cautions that “Business sale, merger & acquisition activity ebbs and flows with industry and macro-economic cycles. Business owners are awake to the fact that market conditions are unlikely to get any better, and that the time to go to market is now.”
Need to Act Now
So if you own a Sonoma County business, you may wish to get a jump on the looming business sale tsunami / buyer’s market. What can be done right now? Start getting your house in order. These steps include:
- Restore healthy sales growth.
- Review pricing and make needed increases in order for margins to meet or exceed industry average.
- Build middle management with the right players in the right chairs. You can’t do it all anymore and expect your business to be attractive to prospective buyers.
- Stop hiding taxable income to save tax dollars. Don’t let the tax tail wag the dog.
We at B2B CFO® can help with these issues. Its what we do. Request a free, no obligation Discovery Analysis at our website, send an email to firstname.lastname@example.org, or call me at (707) 753-1588. Did I mention it’s free and without obligation?