Acquisition Aces - Issue 4

Read Time - 3.5 minutes

The End Of “The Golden Age” Of Business Acquisition (Don’t Wait To Start)

My two older kids are in what many people call the “fun phase”. Old enough to be somewhat independent, but young enough that they still think daddy can move mountains (I can, by the way). Everything they experience still seems new. They haven’t been around long enough for outings to become ‘old hat’, as they say. Even a simple field with flowers keeps their attention.

I understand why people want to hold on to this phase for as long as possible. One of the reasons is because, for the first time as a parent, you get to take a breath. Logistics start to have less friction. Everything flows easily compared to the chaos in the early years. Like all good things, it will transition into a different time. Gone forever.

It is not just your kids that go through different seasons. Business has its own ebbs and flows. I can tell you this from experience. I may be a beginner at parenting, but I am an expert on acquiring businesses. It is the beginning of the end of the “Golden Age” of boring business acquisition. It will never be this easy to change your life with a boring business again. Let’s look at why and what to do about it.

Demographics: Things Only Go Boom Once

Baby Boomers own 45% of small businesses in the United States. They are retiring at a rate of 11,000 every day. This means that there is roughly $10 Trillion in value that needs to change hands either through inheritance, acquisition, or closure (you would be shocked to know how many cash flow positive businesses shut down because there is no one to buy them).

There are 13 million businesses that are going through this transition. All that value has to go somewhere. Once the so-called “Silver Tsunami” runs its course, however, the biggest acquisition opportunity in history will be over. A lot of people have been talking about this, including me. What no one is talking about is another element of this group. Notably, their mindset.

The Baby Boomers are the last generation who adhere to the “classic retirement’ model en masse. This means that in their minds, once they retire, they stop working. In general, they have zero desire to keep controlling interests in their businesses. This means that they want to either be bought out completely or act as silent partners. There are always exceptions, but as long as the checks keep clearing, you typically won’t be hearing a peep from this group. Quiet partners are easy partners.

Diverse Supply Allows For Agnostic Acquisition

When I started my portfolio, I had very strong opinions on what kind of business I wanted. I realized quickly that this view did not serve me. How could I know what type of business to own, when I had never owned one before? There is more to this game than just cash flow. It is incredibly important to know what success looks like for you.

• How much time do you want to spend ‘hands-on’ in the business?

• Do you want to run one business, a portfolio of diverse businesses, or a set of similar businesses?

• Do you want to be ‘on-call’ or is your personal/family time inviolate?

You may find that evaluating businesses from this lens may make opportunities you thought you would never do, not only manageable but super attractive. The sheer number of available acquisitions right now makes finding a perfect buyer/seller fit a much higher possibility.

In addition, everyone likes to talk about Wi-Fi money, but the Boomers made their money in an analog environment. Many of these businesses are effectively recession-proof. When you know your end state, everything is on the table, and I mean everything.

It Doesn’t Have To Be Perfect To Be Perfect

Thinking outside the box means you can consider businesses with barriers to entry to limit competitors. This can include licensing requirements, tech skills, or something that requires government contracts. Another way to hedge against competition is to look at essential businesses that, for lack of a better way to put it, are not very palatable to most people. This can include waste management, portable restroom rental (aka porta potties), and perhaps the scariest of them all:

Funeral service may not be the perfect fit for you, but it is a perfect fit for somebody. Take a few moments to start outlining the desired end-state two years after buying your first business. Do you only have that one business? A portfolio of them? Once you know your overall goals, you are well on your way to becoming an Acquisition Ace. The rest is just the details. If you get aggressive, here is how you can acquire a business in under 6 months.

The clock is ticking in more ways than one. The end of the Acquisition Golden Age has started. Are you going to take advantage of it, or just sit on the sidelines? Only you can answer that question but doing nothing is also a choice. Take action.

PS - Coaching compresses timeframes. If you want help on finding the perfect deal for you, book a time on my calendar here to explore becoming an Acquisition Ace: Calendar

Ben, I Want to learn more…

If you feel that you are constantly working "in" the business instead of "on" the business and feel that your goal of financial freedom has led you to a prison of your own design.

You are not alone, I used to be there as well.

I have 5 companies and counting and work less than 20 hours a week on them - COMBINED.

It is not rocket science and I can help you do the same for your business.

Choose a time on my Calendar and we will get to it.

Onward,

Ben

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