Baby boomers preparing for retirement are driving a surge in small-business sales, as they find more and more buyers confident enough in the improving economy to expand their own businesses through acquisitions.
In the first three months of this year, the number of sales that closed jumped 56 percent from the same time in 2012, according to BizBuySell.com, an online marketplace for small businesses. Retirement was the No. 1 contributor to business sales in the fourth quarter of last year and the first quarter of 2013, according to a survey by Pepperdine University and two trade groups, the International Business Brokers Association and M&A Source.
"It was almost like a light switch went on in January," says Michael Schuster, a broker with World Business Brokers in Miami. "We started getting a lot of activity with sellers who said, 'I don't want to go through another downturn or tough time.' "
Three-quarters of the sellers or potential sellers his company sees are baby boomers, most of whom don't have family members willing to take over their businesses, Schuster says.
"Trillions of dollars of business value are going to change hands in the next 10 to 20 years," says Bob Balaban, managing director at Headwaters MB, an investment bank based in Denver. He believes "strategic acquisitions" -- purchases by companies looking to expand -- will be a key factor. In a tight economy, companies looking to grow feel it would take years to build up their businesses.
"They have to do acquisitions to continue to grow and grow quickly," Balaban says.-- AP