Boomer Business Owners: The Silver Tsunami is Coming, Are You Ready? — Part 2
Today is my last day of a beautiful beach vacation in the Outer Banks of North Carolina (OBX). My husband and I have walked on the beach at least once a day. We especially love the early mornings. The OBX may not be the best surfing spot in the world, but we usually see a surfer or two giving the waves a go. This morning, we watched as a surfer paddled furiously out to the swell that held the promise of a big wave. He turned, and seemed on the verge of jumping up, looking ahead and then to each side. By the time he looked back again, he had missed the wave. He bowed his head and thumped it on the board, because he had missed the opportunity.
As a business owner who is also a Baby Boomer about to be hit with a wave, where will you be when your opportunity appears? The catch phrase, the “Silver Tsunami,” indicates that the transfer of wealth will be immense. Millions of businesses will be sold, shut down, or passed to the next generation. The success or failure of those transitions largely depends on the preparation that you have done thus far, as well as going forward. Just like the surfer that I watched this morning, business owners have to prepare in advance and be ready to ride the wave as soon as it comes over the horizon.
It is estimated that retiring Boomer business owners will sell or bequeath $10 trillion worth of assets over the next two decades. These assets are held in more than 12 million privately owned businesses, and more than 70% of these companies are expected to be sold or passed to the next generation. However, the majority of these business owners have never bought or sold a business before. In fact, the global accounting and consulting firm, PWC, estimates that nearly one-third of owners of small to medium enterprises (SMEs) have no succession plan at all, and just 23% have a written succession plan that has been communicated to key stakeholders. This lack of personal experience, lack of appreciation for the value of skilled external advisors, and overall lack of adequate preparation combine to undercut the value an owner is able to achieve, as well as the likelihood that a deal will even close.
In Triple Pundit, Lisa Coffey published an article entitled: “Why So Many M&A Deals End in Failure.” In the article, she cites data by Arizona Republic management consultant, Gary Miller, who concludes that “80 percent of small and middle market business owners who put their businesses up for sale never close the transaction.” Coffey continues that, “It goes without saying that a quality deal is essential to a deal’s success. Most business owners do well to build a successful business, but seeking to monetize the same in some form of exit is still their Achilles heel. Most business owners have never sold a business, so for them it’s a once-in-a-lifetime event. Therefore, they lack the necessary skills to see the deal through on their own.” Can you see how you might miss the wave and get hit by a tsunami instead?
Research also suggests that owners who choose NOT to utilize outside advisors, and who rely solely on internal personnel to execute a deal, often leave money on the table. To address this need, my proprietary system, Triple A M&A™, fully prepares my clients and their teams for the deal, the transition phase, and beyond. At Ascend, I coach clients to on how to do the necessary prep work through education, developing systems and processes to continue to operate the business effectively during the M&A process, and to identify psychological markers throughout the deal.
Let’s return to the image of an experienced surfer for a moment: he’s out there in the ocean paddling, using the waves to carry him forward. He is choosing to participate, seeking every opportunity, and he’s enjoying the ride. While he may miss a wave, he is confident that another one is coming. By contrast, the inexperienced novice is just standing around on the shore, watching and hoping that he doesn’t miss out on all of the fun, or worse yet, get swept away by a tsunami.
There is a very clear parallel here with business owners as well. Some choose to identify and ride the big wave, and they plan accordingly, while others view the rising waves as threatening and endeavor to stay out of the way. Let me help you ride the wave of opportunity to financial success, leaving a legacy intact through preparation, self-awareness, readiness, and resilience.
