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ARTICLES
Selling Texas Businesses
Since 1974
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Selling Texas Companies Since 1974
Our monthly newsletters provide information about buying or selling a business, current economic conditions, and highlight some of our newest business-for-sale opportunities.
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"The best library of articles about how to sell
your business "..... says The New York Times
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There's A Perfect Storm Approaching For Exiting Business Owners
By: Gary Ampulski
On January 1, 2011 about 8,000 Baby Boomers (people born between 1946 - 1964) turned 65 years of age. Every day for the next 18 years, others will turn 65 at the same rate. While many may know about this trend, a lesser known fact is that, according to the US Census Bureau, 70% of all businesses (with more than 1 person on the payroll) or 4.2 million businesses are owned by people over 53 years old.
What are the prospects for transferring those businesses when the owner is ready? The need to liquidate ownership will impact all of us, young and old, as the boomers try to capture the wealth that they have created over their lifetime. But there is good reason to believe that there is going to be far less of it than they might expect. In fact, the elements of a perfect storm are brewing.
If every owner in the over 53 crowd is depending on selling their business to fund the next stage of their life (be it retirement or something else), the amount of capital required to close all those transactions is over $10 trillion dollars. Where is the money going to come from to fund those acquisitions?
There has been a stock market bubble, a housing bubble, a dot-com bubble, but never before have we seen an owner demographic bubble. This "age wave" is coming like a tsunami.
There is currently about $535 billion in funds available ("private equity overhang") to acquire businesses - nowhere near the amount of equity needed to do even 10% of the transactions that will be up for sale. Even if fresh investment capital becomes available, the amount of supply will drive values down significantly.
There is a Market Transfer Cycle and every ten years there has been some kind of recession. It is currently a seller's market but the bull has had a long run and it will get tired sometime over the next three years. It always does. When it does, it will become a buyer's market of major proportion and only the strongest deals will get transacted.
There are three major forces at work and together they are impacting the owner's situation exponentially:
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Sugarland Party Rentals
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| | Pictured left to right: Chetna Patel (Buyer), Virginia Keeley (Seller), Marcia Bowron (CBB Broker) |
Ms. Patel, the Buyer, also purchased another business from CBB in July 2013. Her husband, Sam, works in corporate world. Ms. Patel will continue working at the other business, and will be able to run the party rental business from there via phone and internet. Her other family members and employees will deliver and be customer facing.
Seller, Ms. Keeley, was very organized and quick to respond to buyer questions and needs during due diligence. We were able to close within two weeks of getting the contract to purchase. Keeley moved to Austin a year and a half ago and has a shaved ice business in Georgetown and hopes to grow it into a franchise.
A note from Ms. Keeley:
Marcia, Thanks so, so much! Considering I just found your company (CBB) on the internet, I took a leap of faith that you were legit. I know nothing about how to sell a business, and got a price that I am more than happy with in less than 30 days. You have absolutely made my year! When it comes time to sell my hula cowgirl franchise chain of 1000 stores- you will be the one I call! Regards, Virginia
Marcia Bowron listed the business and sold the business.
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Club Max
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| | Pictured left to right: Caroline McMillan (Seller), Ryan DeGennaro (CBB Broker), Jay Yoo (CBB Broker), James Ayers (Buyer) |
Club Max was was purchased by Ms. McMillan in 1987. She had immigrated to Houston in order to do so. The business is a small neighborhood bar that has had the same regulars for many years, many of the regulars' sons and daughters also became regulars. She says there are families that have three generations that visit the establishment together.
The buyer, Mr. Ayers, started looking for a business with us in January and looked at a total of eight business. He looked at Club Max the day it went on the market and was under contract within a few days, and it was sold in 30 days.
Ryan DeGennaro listed the business and Jay Yoo sold the business.
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Menchie's Frozen Yogurt
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| | Pictured left to right: Jay Yoo (CBB Broker), Luis Delgado (Seller), Doug Ashby (CBB Broker), Michael Naquin & Family (Buyer) |
This like-new yogurt franchise in Kingwood was sold within five months of going to market. The Buyers, residents of Kingwood, looked at only two businesses and realized that this would be the perfect family business for them.
Jay Yoo listed the business and Doug Ashby sold it.
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Fairfield Hair Studio
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| | Pictured left to right: Cecilia Nguyen (Seller), Jay Yoo (CBB Broker), Tiffany Lu & Manny Tran |
After starting this full-service Houston-area salon nine years ago, Ms. Nguyen is getting married and will be moving out of State. Which meant she had to sell her business.
Buyers, Tiffany & Manny, knew what they were looking for and this was it.
Jay Yoo listed and sold the business.
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Turk Inan Salon
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| | Pictured left to right: Graciela Vargas (Buyer), Turk Inan (Seller), Marcia Bowron (CBB Broker) |
The buyer, Ms. Vargas, looked at only one business with us, Turk Inan Salon. It is strategically located inside the loop with employees already in place. The salon has an exclusive lease on hairstyling services in the center. A great location, great build-out, a great client base, and room for three more employees.
Mr. Inan, the Seller, wants to spend more time with family and will rent booth space from buyer.
The business was sold within five months of going to market.
Marcia Bowron listed and sold the business.
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Ask The Experts
Question:
How did small business become the backbone of America?
Answer:
After WWII with the passing of the G.I. Bill a wide range of benefits were available for returning World War II veterans. These benefits included low-cost mortgages, low-interest loans to start a business, cash payments of tuition and living expenses to attend university, high school or vocational education, as well as one year of unemployment compensation.
These returning G.I.'s were welcomed home with open arms, with government incentive programs to help those returning and to spur the economy, which ultimately created the wealthiest nation with the highest standard of living on the planet.
By 1956, roughly 2.2 million veterans had used the G.I. Bill education benefits in order to attend colleges or universities, and an additional 5.6 million used these benefits for some kind of training program. A large number of those GI's took advantage of these government incentives to start small businesses, which ultimately became the backbone of the nation and created the fastest growing economy that ever, existed.
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Texas Economic News
