I came into business brokerage 10 years ago with a promise of a “Silver Tsunami”, a demographic wave of why Baby Boomer business owners with no succession plan and trillions of dollars of small businesses needing to sell in the next 10-20 years. In theory, It should be the biggest Buyer’s Market in History right now! A huge wealth transfer! BUT, the entire time I’ve been brokering deals it’s been much more of a Seller’s market than a Buyer’s market. Buyers still vastly outnumber Sellers. So what gives? 6 things: 1) There’s a “Buyer Tsunami” that’s bigger than the Silver Tsunami. All the business schools are teaching about ETA (Entrepreneurship through Acquisition) and pumping out hungry grads looking for deals full-time, aggressively. Also, social media superstars like @Codie_Sanchez and @sweatystartup are turning people onto entrepreneurship at a staggering rate. It’s becoming mainstream-cool to leave the corporate 9-5 and go buy or start an SMB. Lastly, more and more small business owners in the Gen X and Millennial cohorts are learning about growth through acquisitions and joining the fray looking for add-ons and building multiple location strategies and HoldCos. Combined- much more Buyers entering the space than retiring Boomers can satisfy the demand for. 2) COVID took out a chunk of Sellers. Many businesses took a big hit and shuttered permanently during 2020-2022. Others survived but gave up hope of selling in 2023-now because they were anchored to their old valuations and can’t get back to where they used to be on profitability and haven’t adjusted to the post-COVID world. So they’re closing or just limping along mortally wounded unable to come to grips with selling for a much lower value. 3) Boomers in general suck at preparing their business’ books for Buyers and Banks and making their business’ profits provable and their deals bankable. They’re old school and hate showing profits because they don’t want to pay too much in taxes so they have these decades-old ingrained habits of keeping lackluster records, ‘forgetting’ to report cash sales, bartering services with their friends, and writing off as much discretionary expenses as possible, making their tax returns and P&Ls look like they don’t make any money. Why? Today’s Buyers want to borrow and leverage SBA loans and if the business can’t easily pass underwriting with its historical tax returns, they’re VERY hard to sell. 4) Commercial Real Estate has been appreciating like crazy for decades. Real Estate For Sale Banner Boomers that have Owner-Occupied businesses and want to sell the RE with it have a problem. Why? They paid tens or hundreds of thousands for their building/land and now it’s worth MILLIONS. They aren’t impacted by it because they paid off the RE long ago and just pay themselves whatever rent they feel like or none at all. But when they want to sell by golly they want the business value AND the appreciated Real Estate at top dollar (often they still want top ’21-22 prices before interest rates rose). These RE values are often more than the business can support in rent or debt service. So to get top dollar for the Real Estate, they may have to close or liquidate the business and sell to a different Buyer that can put something else there that is today’s Highest and Best Use. Many remain in purgatory unwilling to close their business they love and unwilling to accept offers for the RE that the business can sustainably support. 5) Boomer psychology is an underrated barrier. This generation highly identifies with their businesses. They feel like they are the business, and selling feels like they’re losing their meaning, their worth, and even reason to live. They equate selling to “being put out to pasture” which feels like they’re one step from the grave. This is making them hold on longer, often until a major health scare or they drop dead, at which point the business is much more likely to be distressed, close and liquidate than able to sell, further compounding the problem for Buyers. 6) Many, in fact MOST, of the Boomer Businesses never were sellable and never will be. More than half of “small business owners” are essentially self-employed. Why? Revenues under $1M, wrapped around the owner’s skills, relationships, and lifestyle and don’t work without them there working. AND they’re only making enough profit to take care of the owner, but not enough to support business purchase debt or hiring a GM to run it. So even if a Buyer wants their lifestyle and is capable of filling their shoes, the value is still essentially $0. These “businesses” all go poof when the owner retires or passes. If you’re a Buyer frustrated with market dynamics seemingly making buying a business an uphill battle, hopefully this helps you understand why. There is hope though!! Follow me on X for deals and read my “How to Find a Business to Buy“blogpost. You can still win as a Buyer but it’s not easy and you need to learn the game and get good at it! I’ll keep pumping out content and deals and try to help as best I can! – Clint Fiore