Some of the latest research out of one of the nation’s most experienced firms assisting senior policy owners, Asset Life Settlements, indicates baby boomers are seeking to cash out and retire more and more in recent years, precisely as predicted by numerous other analysts. Relative improvements in the near-term economic outlook, as well as the overall performance health of small businesses, has driven up the number of aging owners looking to sell their businesses and one can see a strong correlation here with the Pepperdine University data from May this year, which found that 65% of all businesses sold in Q1 were from baby boomers, further reinforcing the validity of this growing trend. Pepperdine’s survey from last year, showing 67% of business owners intended to retire in the next decade, is a another leading indicator here and characterizes accurately the projected roadmap for the roughly 25M or more small businesses estimated to be sold over the next decade or so as boomers retire.
The U.S. small business confidence index rose slightly in August, with business owners also anticipating improving conditions and subsequently planning increased CAPEX, according to a related survey by the National Federation of Independent Business. Pair that up with the fact that boomers control approximately 70% of the total wealth of the U.S. and represent over half the nation’s purchasing power, as well as consumer spending, and you get a pretty accurate picture of what the next decade and a half will look like, especially when it comes to business turnovers. The fact that boomers represent upwards of 80% of the leisure travel market and generate some 77% of the country’s financial assets basically says it all, we are going to see one of the greatest wealth transitions in the history of the entire planet as boomers continue to retire at the rate of 10k plus a day (Pew Research), shaking up plenty of acquisition opportunity in what is an approximately $17T pie.
This is where financial/management holding company LD Holdings, Inc. is targeting their expansion strategy, emphasizing an ability to provide financial services to an underserved retiree market and generate considerable returns for their investors by employing a small cap Berkshire Hathaway (NYSE:BRK-A) roll up approach. Focusing on acquiring profitable sub-$20M businesses (larger targets considered, nothing smaller than $2M generally and profitability for 3-5 years as well as a clear ramping strategy required) and empowered by a $10M secured credit facility from a qualified institution, the company has already taken their first major steps towards finishing an initial goal of acquiring three targets totaling some $16M in sales ($2.3M EBITDA), via an LOI with a certain Midwest Landscape Maintenance Company. LDHL is also currently still in negotiations with a handful of (at least four) other companies in this same vein that could be rolled up, using the initial outdoor Green Sector landscape maintenance company acquisition as a central platform for growing their footprint in the $25B plus U.S. lawn maintenance space. The lawn care services market alone is upwards of $4B a year and it seems safe to assume more and more consumers will seek out help in this regard as boomer home owners continue to retire in large numbers.
By focusing on helping profitable boomer business owners realize exit strategies amid increasingly tightened long-term, underlying economic conditions, during what is effectively an up cycle, LDHL looks to build up a strong venture capital return portfolio without incurring the risks typically associated with venture capital. This is a strong proposition to investors and with overarching plans to roll up as many as 50 businesses, consolidating them into cohesive units, there is a great deal of upside yet to be realized for LDHL. The eagerness of boomer business owners to get out while the getting is good can be fairly characterized by soaring interests costs on the $17.7T and growing U.S. national debt, putting pressures on retirees which are exacerbated further by rapidly escalating entitlement spending figures, projections on which indicate that by as early as 2019, $0.90 of every dollar of federal revenue will go to said entitlements before even one dollar is applied to any other budget item.
To further the company’s portfolio build out, LDHL has entered a JVA with one of the biggest and most well organized multimedia marketing companies in the country, Internet Marketing Consortium, in coordination with their push into Green Initiative projects. This move gives LDHL access to a sizeable database of hundreds, or even thousands of quality acquisition targets, simultaneously bringing the company’s game plan to the fore and increasing exposure via souped-up marketing strategies that will hit social media and internet radio in particular with considerable force. President of the Internet Marketing Consortium, Beryl Wolk, brings over four decades in marketing experience to the table, having worked with outfits like QVC and the Discovery Channel, and is widely known as a sort of marketing genius.
LD Holdings’ core Business Services Division is a serious due diligence engine with a continually updated database of target companies, to which new prospects are constantly being added after their circumspect evaluation. This database also gives LDHL a historical view of different industries, distribution channels and the evolving geographical advantages or disadvantages related to a given business/sector, allowing the company to cleverly price their acquisitions. Moreover, this core business division of LDHL maintains a sizeable entrepreneur database spanning a range of specific fields and sectors, an invaluable resource for strategizing acquisitions and acquired targets’ post-acquisition business models, as well as for rigorously vetting new acquisition candidates. Similarly, LDHL’s Business Services Division maintains a database of key investors. Investors tagged for possessing a shared vision and similar objectives, who also are known for their desire to get in at the ground floor and stick to their guns, holding on for long-term, superior rates of return.
For more info on LD Holdings, visit: www.ldholdings.com
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