Over the next 20-odd years, Baby Boomers will sell or pass on over $72 trillion in wealth. It will be the greatest wealth transfer seen in modern times. The largest vehicles of wealth that Boomers currently own are homes and small businesses. The latter item is of special interest; homes rise and fall with the market, but businesses can grow at any time.
Right now, Baby Boomers own 40% of America’s small businesses. Many of them have been in operation for decades, and 3 in 4 are currently profitable. But what happens when Boomer business owners retire? It’s not guaranteed their adult children will choose to take over. Some small business owners may not be able to afford keeping it in the family. Over the last several years, healthcare and long term care costs have risen dramatically. Selling might be the only way to fund a comfortable retirement.
Who will retiring business owners sell to? Many are too small to catch the eye of private equity. Instead, their brands are a golden ticket for Millennials ready to become their own boss. Buying an established business can be much easier than starting one from scratch. Established brands come with loyal customers.
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