As Boomers Retire, a Jump in Small-Biz Acquisitions
Baby boomers are retiring, and that means their small businesses are being acquired at an increasing rate.
Boomer business owners are starting to throw in the towel, and a recent Pepperdine University study pinned the sales of businesses from the end of 2012 and into 2013 on retirement, the Associated Press reports.
What does this new trend mean for your small business?
Baby Boomer Owners Ready to Sell
Many baby boomers who have steered their businesses through the last several years of economic downturn are tired of weathering the storm. One 70-year-old business owner who ran a landscape management company told the AP that struggling with the economy was a major factor in selling his business in 2013.
While the economy may be bad news for some, small businesses acquisitions have increased 56% since May 2013, according to BizBuySell.com. For boomers ready to retire, you may find this a great time to sell your business.
Still, if you're having a tough economic year, now might not be the best time to sell. It may sound like common sense, but businesses are evaluated based on their future fitness and profitability. One good year in the market will give your business a sunnier outlook.
In fact, you may not even know how much your business is worth until you sit down with an appraiser who can even calculate the value of intangible assets like "goodwill."
Be Prepared Before Being Acquired
Say that your company is approached by a broker who wants to acquire your business. Here are a few things you'll need to prepare:
- Business-organization documents. This covers anything relating to the formation, operation, and organization of your business, including your Articles of Incorporation.
- Financial information. Gather your credit reports, projections of profit, a list of assets, and at least three years worth of audited financial statements.
- List of physical assets. This includes all fixed assets.
- Employee information. Organize your files on your employees, their roles, benefits, and histories with the company.
- Tax returns. Your potential buyer will want to know if you have any tax liens, and that your employee taxes were done properly.
This just scratches the surface of what retiring boomer business owners need to know when their small business is being acquired. To get specific advice on your particular situation, consider consulting an experienced business acquisitions attorney.
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- Due Diligence Checklist - Being Acquired (FindLaw)
- Selling a Business (FindLaw)
- Steps to Close Your Business (FindLaw's Free Enterprise)
- To Buy or Rent, a Small Biz Dilemma (FindLaw's Free Enterprise)
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