Boomer small-business owners are putting their businesses up for sale in record numbers, reports BizBuySell.com, an online marketplace for sales of small businesses.
BizBuySell says sales of small businesses rose 56 percent in the first quarter of 2013, compared to the first quarter of 2012.
The most common reasons for selling revolved around retirement planning, according to a study of small-business trends by Pepperdine University's Graziadio School of Business and Management, along with M&A Source and the International Business Brokers Association, or IBBA.
"Many boomers would have sold in 2009 or 2010, but they got blindsided by the recession and had to hold on much longer than expected," says Scott Bushkie, principal of Cornerstone Business Services, a member of the IBBA.
The study found a few things that anyone considering selling a business to enjoy retirement should think about:
- On average, selling a small business takes more than a year.
- The most common buyer for a company that has less than $1 million in revenues is someone or some entity that lives in the same state.
- The most likely buyer is another, similar business. The second most likely is someone who previously owned a similar business.
The federal Small Business Administration, or SBA, advises small-business owners planning to sell to start putting a strategy in place early. "Planning your exit is a big undertaking that has implications on employees, your business structure, its assets and your tax obligations," according to the SBA.
Score, the SBA's volunteer Senior Corp of Retired Executives, posts this checklist:
- Give an honest explanation of your reason for selling the business.
- Set a sale price that is fair, equitable and negotiable -- and be prepared to help the buyer get financing.
- Produce all business records requested.
- Present an appraisal of assets, liabilities, future revenue, name recognition, customer/client base and other entities incorporated in the sale.
- Offer ongoing support after the sale and be willing to sign a statement that says you won't compete after the sale.