Retirement Could Bring A Wave Of Boomer Businesses To Market
So-called “business brokers” match buyers and sellers for all kinds of small enterprises, everything from high-end hair salons to septic tank cleaning. For those in the business of selling businesses, 2014 is expected to be a big year across Colorado and the U.S.
When it comes to the recent boom, it’s, well, baby boomers who are mostly behind the uptick.
Take for example Roy Hansen. For almost two decades, aspiring big rig drivers have turned to Hansen’s Northern Colorado Truck Driving Academy for their training.
Increased construction and clean up from the September 2013 floods have put truck-driving jobs in high demand. Great for Hansen, but with his 69th birthday coming up he’s starting to focus on retirement and selling his business.
“You can only have one broker. It’s not like a multiple listing where you’re selling a house. You can’t do it that way,” said Hansen, who has put his school up for sale. “So the broker you choose you better stick with. And you have a year commitment with them.”
The popular online marketplace Bizbuysell.com reported a 49 percent jump for 2013 in closed transactions. Many business brokers like Ben Mahrle with Mountain States Business Brokers Group see baby boomers driving this trend.
“2012 was really good, last year was pretty good, this year is starting out even better,” said Mahrle.
A big part of the growth has to do with access to capital. Loans were hard to come by right after the Great Recession. While money may have been available after that, Mahrle says many would-be buyers and sellers couldn’t close a deal unless the business had three years of profitable books.
“We now have those bad years behind us,” said Mahrle “Most businesses are recovering which is making things a lot better. And we’re seeing a lot more transactions.”
Ben Mahrle will post Hansen’s truck driving academy online. It’s on the unique side, but Mahrle has said he’s sold other niche businesses from pack-and-ship stores to one Fort Collins laundromat.
Incidentally, he said he’s sold that laundromat four times.
According to the International Business Brokers Association, businesses that provide personal services, construction and health care services [.pdf] are also in high demand.
“What typically happens, these people are not just selling some asset,” said Scott Bushkie, a board member with the International Business Brokers Association and owner of his own brokerage. “These business owners — especially if they’ve founded the business — it’s like giving up one of their kids for adoption.”
Bushkie says he’s starting to see clients who unsuccessfully put their businesses up for sale around the last recession.
“That’s why we think 2014 and beyond for the next several years are going to be very good years because a lot of people who shoulda, woulda, coulda sold in 2006, 2007, 2008 are not going to miss this window again,” said Bushkie.
According to a recent survey conducted by IBBA, 87 percent of brokers who responded expected 2014 to bring more sales [.pdf] compared to the previous year. The confidence underscores what Bushkie describes as the “perfect storm.”
“You have more buyers with a lot of cash, you have more baby boomers coming out into the marketplace and financing is getting more aggressive each and every day,” said Bushkie.
One lingering question around the growth trend is whether there will be enough buyers for all of these businesses.
Right now that’s not a problem for people like Roy Hansen and his truck driving school.
Hansen acknowledges that he’s in a niche market, but remains hopeful that there will be interest. Even though he’s looking to retire, Hansen says he’s prepared to spend however much time it takes to transition a new buyer into this business.
“I’m going to give them 3-6 months of my expertise,” he said. “Whoever does buy this will have an idea of what to do and how to do it, and won’t be in the dark.”
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