There is considerable buzz out there that a large population of Baby Boomer generation is gearing up to sell its business endeavors to younger buyers. The forecast is that business-owning Boomers are ready to enter into their Golden Years and that in the next 20 years there will be trillions of dollars’ worth of businesses that go on the market as they do. Let’s say the prediction is true – are there enough prospective buyers willing to test the small business market and send Baby Boomers into their retirement?
There are plenty buyers and they are a diverse and young bunch, according to a 2013 report by Bizjournals.com. In a study of 2,000 buyers and sellers, the report showed that more than ever before, women and minorities are looking for business ownership opportunities. While the market is still male-dominated (comprising 81% of all buyers), women accounted for 9% of buyers over 65 years old; 19% of buyers 50-64 years old; 20% of buyers 30-49 years old, and 23% of buyers 18-29 years old.
Interested parties were also more racially diverse, especially among the younger crowd. Bizjournals.com reported findings that while 87% of buyers aged 65 and older were Caucasian, that percentage decreased as the age of buyers decreased. Caucasians accounted for 78% of buyers aged 50-64 years; 66% of those aged 30-49 years; and 48% of those aged 18-29 years.
So how exactly will this transfer of generational assets go down once the Boomers are ready to sell?
Historically, business sellers would only provide minimal or no financing to the buyer. These types of transactions were too large for most individuals to finance and too risky for banks, which took into consideration the company’s individual merits as opposed to the buyer’s personal balance sheet. On the other hand, these transactions were too small to interest most institutional investors.
Today, there’s a new form of financing triggered by the anticipated Boomer sell-off.
Companies like LD Holdings are gearing up to step in and fill-in the blanks, noting that there are currently more than 25 million small businesses worth an aggregate $17 trillion that will be sold in the next 15-20 years. This particular company’s goal is to become a “known buyer” of small companies that meet its acquisition criteria, including an existing management and personnel, brand equity, customers and cash flow, at discounted prices. It will then attempt to produce venture capital-type returns without the venture capital risks associated with a start-up company.
Within five years, LD Holdings plans to accumulate at least 45 of these small companies and to slowly meld them into cohesive business units. The company’s objective, through aggressive use of the Internet, is that while the search for acquisitions is being conducted, it will establish an outside investor base that shares the company’s vision and objectives is willing to hold their positions for a year or more.
Through its Business Services Division, LD Holdings maintains a database of entrepreneurs looking for business owning opportunities, giving particular attention to those with specific backgrounds and expertise that will be available for both acquisition evaluation and strategizing the post-acquisition business model, once the financial aspects of the transaction are determined.
For more information visit www.ldholdings.com
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