HOW WILL THE EXPECTED WAVE OF BABY BOOMER RETIREMENTS SHAPE M&A?

It may come as some surprise, given the current high frequency of deals, that Mergers & Acquisitions are just as susceptible to economic cycles and principles as any other industry. Many factors, including the supply of businesses for sale, the availability of credit, and the liquidity of acquirers, have significant impacts on the volume of deals in a given period. Perhaps no economic force has been studied and forecast quite so vigorously over the past 10 years as the impending Baby Boomer retirement. It is estimated that approximately 75 million baby boomers will be turning 65 at a rate of 10 thousand per day for the next 15 years, based on U.S. Census data. This translates to over 4 million businesses facing a potential succession event in the next 10-20 years. This anticipated wave of activity has significant strategic implications for both sellers and buyers of private businesses.

Determining when to sell a privately–held business is often a deeply personal decision with a range of emotional and financial factors carrying weight. Owners should certainly consider where the business sits in its unique business or industry cycle. However, owners must also consider the macroeconomic impact of a higher volume of available businesses coming to market at the same time and the likely pressure it will have on pricing. Timing matters when making investment decisions, and the impact of the increasing supply of businesses looking to sell should be part of succession planning discussions. Furthermore, the discussions should begin now so that owners can react opportunistically as exit opportunities present themselves.

Seale & Associates has experience advising hundreds of private and family-owned businesses on the challenging and very personal aspects of succession and estate planning. We understand the dynamics of family-owned and private businesses, as well as blue-chip corporations, and can facilitate an open dialogue with owners to help them choose the best plan to achieve their unique goals and objectives.

Seale & Associates is well positioned to help potential sellers navigate this difficult process and take advantage of the current market conditions, from front end strategy consulting to back end M&A advisory.