Key Takeaways:
- With the rise of retiring baby boomers, a significant wave of small and mid-sized businesses are beginning to look for new ownership, presenting a great opportunity to acquire businesses.
- These businesses have strong customer bases and consistent revenue, however, they often lack succession plans or growth strategies
- Traditional methods of finding retiring business owners are inefficient, but AI-powered platforms like Inven can help to elevate the process.
A Wave of Retiring Business Owners
As the baby boomer generation reaches retirement age, we are now experiencing significant changes in business ownership. In the United States, the year 2024 marked a record-breaking year for retirement, and from 2024 through 2027, approximately 4.1 million Americans will turn 65 every year. Similar changes can be seen across other western countries. For example, large generations born in the late 1950s and early 1960s are retiring in areas such as France, Germany, Poland, Scandinavia, the UK, and Japan.
This phenomenon, known as “Silver Tsunami”, marks a significant demographic shift. The figure of soon-to-retiring workforce is substantial, and the trend is expected to continue for several years. In fact, two-thirds of small business owners plan to retire in the next few year. However, as life expectancies are increasing, future retirement plans are in a fluctuation, and people are working beyond traditional retirement ages. In the EU, despite the average legal retirement age being 64, a significant number of people are working past 65 and even 75.
The Silver Tsunami will have significant implications for the labor market and the economy. If you're looking to acquire a company, businesses with owners nearing retirement can be promising targets, as they may be more open to selling.
New Supply of Potential Small- and Middle Market Businesses for Sale
As baby boomers are preparing to step down, businesses are in need of new ownership. For those looking to grow through acquisition, the timing couldn’t be better.
The Silver Tsunami indicates a massive transfer of ownership in thousands of businesses. Most of these businesses operate in stable, cash-flow positive sectors like HVAC, plumbing, manufacturing, and other long-established industries. These types of businesses typically have steady performance and loyal customer base, but can lack the capital and vision for continued growth, making them attractive targets.
Who will Benefit from the Silver Tsunami?
The Silver Tsunami is opening up valuable opportunities across the M&A landscape.
- Private equity firms are finding profitable add-on acquisitions among retiring-owned businesses
- Investment banks and business brokers can expect an increase in deal flow as they assist these owners with succession and exit planning.
- For corporate buyers and investors, this trend creates a favorable environment to ramp up their M&A activity.
- Search funds also stand to gain, as they seek stable, cash-flow positive companies to acquire, operate, and grow.
How to Find the Silver Tsunami Deals?
Focusing on companies with soon-retiring owners is a great way to find warmer off-market deals.
This clearly presents an opportunity, but how can you find these businesses with owners looking to retire?
Finding these companies is often difficult and it takes an awful lot of time. The traditional methods, knocking on doors, scrolling through Google results, and relying on word-of-mouth, are inefficient and time-consuming. Cold calling to find out the owner’s age is hardly a recommended strategy either.
The good news is, there is a much easier way to do it!
Here at Inven we see the Silver Tsunami as a ‘big deal’, and we want to make finding these deals as easy as possible. Inven provides an AI-driven deal sourcing platform that drastically cuts down the time needed to find off-market deals.
With a simple natural language search prompt, such as “I want to find plumbing businesses,” and selecting the Intent to Sell filter, you get a list of companies whose owners are likely facing an upcoming generational handover. This AI-powered approach takes only seconds to complete and ensures you have an extensive coverage of the selected market (or niche), and a strong pipeline of off-market deals.
Webinar: The opportunities of the Silver Tsunami
Curious about the opportunities the Silver Tsunami is creating and how to find them? Then this webinar might be for you! See Inven’s platform in action and learn how it helps you seize opportunities in the Silver Tsunami.
Surf the Silver Tsunami
The Silver Tsunami is here, and now is the time to prepare for the massive transition and opportunities that are already underway.
Investment banks, search funds, private equity firms, and strategic buyers stand to benefit greatly by leveraging technology like Inven's AI-powered search and intent to sell signals. If you're ready to ride the wave, book a demo to see how Inven can help you stay ahead of the competition.
About the Author: Konsta Saastamoinen
Expert in Deal Sourcing, M&A, and Silver Tsunami Acquisitions
Konsta Saastamoinen is a seasoned deal sourcing and sales professional specializing in helping investors and M&A professionals find and acquire businesses from retiring owners. With a deep understanding of online marketplaces and AI-driven deal sourcing, he has helped countless professionals secure profitable opportunities in the booming Silver Tsunami business transition.
His highly-rated webinar (4.8/5) on using AI for business acquisitions has helped M&A professionals find hidden gems in the market with precision and speed. Whether you're a first-time buyer or a seasoned investor, Konsta’s expertise helps you streamline deal flow and close successful acquisitions.
