In the third quarter of 2017, 2,589 companies listed on the online marketplace changed hands. That was 23.8 percent more than the 2,090 that sold in the third quarter of 2016 and 53.8 percent above third quarter 2015.
As the Baby Boomer generation passes into retirement, a record number of businesses will be put up for sale as they try to maximize their retirements. According to the Exit Planning Institute, more than 4.5 million companies representing more than $10 trillion in business value will up for sale over the next decade. There is a glut because many of the company owners were forced to delay retirements because of the Great Recession, waiting until the economy restored company values to where they were before 2007.
Still, EPI estimated only 20 percent of the businesses on the market in 2016 actually sold. That’s because for as much as business owners like to run their businesses, few of them like to put time into an exit plan. In February, Nationwide released a small business survey conducted by Harris Poll that showed a shocking lack of exit planning.
The survey of 502 business owners of companies with fewer than 300 employers revealed that 47 percent of business owners felt exit planning “is not necessary.” Other reasons included not wanting to give up one’s life work (14 percent), not knowing when to create a plan (14 percent) or not having time to develop a plan (11 percent).
Even if you don’t plan on selling soon, if you are above 50 and don’t have an exit plan, you’re putting your legacy at risk. Companies without a contingency plan for the sudden disability or death of its leader are far less likely to survive an additional five years.
Interestingly, this seems to be a Boomer thing. According to the Nationwide survey, Millennial business owners were far more likely to be working for an exit with 61 percent having a succession plan in place compared with just 32 percent of Baby Boomers and 32 percent of Gen X’ers.
And Millennials are supposed to be the slackers?