I remember when I joined the business brokerage profession several years ago, I had a very strong belief that the market for businesses for sale will grown dramatically in Canada as a result of baby boomer retirement. Now I discovered trough my experience that most of the businesses currently for sale are not been sold because of retirement. Why is the reality so different from most economic predictions?
While my personal experience as a business broker might not be representative of the larger business for sale marketplace, my discussions with other brokers have also confirmed this same fact. Lets do some analysis of what is happening!
In Canada, Baby boomers are born from 1947 to 1966 so the oldest baby boomers are now 64 years old. We should definitively have seen a spike in the number of businesses being sold for retirement purposes. I can suggest some explanations for this discrepancy:
- Business owners are very driven by nature and tend to postpone their retirement age and remain active even after 64. Since they have no obligation to retire, they choose to retire at an older age than employees. I have personally seen business owners still active at the age of 78.
- Business owners try to avoid selling during these recessionary times because their investments are not doing very well and the timing for selling their business is less than perfect. Therefore, they cannot afford to retire now and are waiting for better times to do so.
- Medical advances enable people to work at much older age than before. The regulatory retirement age of 60 is not relevant anymore. Since business owners decide when to retire, they are choosing to retire much older because their health can afford it