Think baby boomers, think opportunity.
An ageing population of business owners and a generational shift in business succession strategies is poised to bring unprecedented opportunities for major investments.
This will be in the form of small to medium businesses for sale, as the baby boomer generation continues to reach retirement age and exit the business sector.
About 22% of the nation’s 2.1 million businesses are owned by people 60 or over. Factoring recent succession models, this translates into potential sale of about 280,000 businesses over the next five years.
So, what’s in it for you?
For wannabe businessmen, the riskiest part of any business is the first three to five years when most fail. For them, what’s on offer are up-and-running businesses that that have already survived the early volatile period.
Deal frenzy ahead?
Deal-making enthusiasm and investing dollars are high, too, creating a near-perfect market.
A recent Wholesale Investor survey found that only 1% of investors considered the current environment to be unattractive for investment, which is to say, an improbable 99% are in the market for good bargains.
The rosy picture is complemented by the copious availability of investing funds. In 2010, angel investors pumped in $1.5 billion into Australian deals, according to the Australian Association of Angel Investors. That liquidity bubble has been sustained.
Today, the Australian Venture Capital Association Ltd. estimates $2.5 billion sitting in the hands of VCs looking to buy businesses or other cash-producing assets. Also in the race, are publicly listed companies with surplus funds looking for profitably managed businesses.
All told, the business environment looks exciting with plenty of deals for keen investors and ordinary people who can spot a bargain and successfully renovate a business. The number of people who already do this is unquestionably small, but is poised to grow.
Another beneficial result as baby boomers age, is the expected spike in consumer spending, fueling possibly Australia’s biggest boom in recent times. The spending will noticeably increase on luxuries and holidays as the retirees sustain and even improve upon their lifestyle in a bid to enjoy the fruits of their work life, rather than leave it all as inheritance.
Kerwin Rae is a businessman, coach, mentor, entrepreneur, author and speaker. He has coached consultants on business development and entrepreneurial psychology. He was recently appointed to the board of MBE Education.