World Class Mergers & Acquisitions  |  For Companies $5 Million to $100 Million in Revenue

WSJ Article – “The Economy Stole My Retirement” – Retirements in Peril for Entrepreneurs in Their 60s and 70s Who Can’t Sell Their Companies

This article appeared in the September 12, 2012 edition of the Wall Street Journal.

The authors observed that:

  • “The weak economy has been tough for small-business owners across the board, with their total revenue inching up by just 3% since 2007 and declining in fields such as construction (-12%), real-estate services (-3%) and retailing (-2%)…”
  • “…But for entrepreneurs in their 60s and 70s, the consequences have been particularly vexing.  Many of them are stuck in “business purgatory,” unable to retire and forced to hang on for a recovery that economists say could still be a long way off.”
  • “I am so tired,” one of the business owners interviewed says. “I don’t know that I’ll ever be able to retire.”

Here’s a link to the full article:

As the generation of Baby Boomers approaches retirement, it has been estimated that over the next 15 – 20 years, retiring business owners with be seeking to successfully exit their businesses, with an aggregate value in the trillions of dollars.

Without the assistance of an experienced M&A advisor and a comprehensive transition plan & process to maximize the value of their business – and ultimately their own personal wealth – many of these business owners will typically:

  • Exit their companies as a result of pressure from outside circumstances, not as a result of their own desires
  • Exit their companies on a timetable that’s forced on them, instead of one that meets their needs
  • Undervalue their companies and leave hard earned wealth on the table
  • Pay too much in taxes
  • Lose control of the process by being reactive rather than proactive
  • Fail to realize their business and personal goals
  • Suffer unnecessary personal stress

From experience, we recommend that our selling clients begin the process 2-3 years before they believe they will really need to exit the business.  While some businesses have sold in as short as six months, the average tends to be closer to a year, with some businesses requiring 2-3 years before finding the right buyer and the right deal.  In addition, some business may benefit from making a few changes/improvements to their business to command the best price and terms, and it may take from a few months to a year or more to implement those changes.

By: Mike Ertel, Transworld M&A Advisors