Health issues and business exits
One big factor in baby boomer private business exits that is often present but rarely mentioned is health. And in particular, the health of the seller.
To my knowledge, no statistics exist to demonstrate how many baby boomer business sales are driven by actual or anticipated health issues. But my own estimate, having advised on hundreds of these transactions, is 50%. Yes, that’s a whopping one half of all baby boomer business exits.
I remember one transaction about 5 years ago. We were acting for a large company buying out a smaller, privately owned competitor. The transaction was negotiated and completed in a timely manner and with no major issues.
As all parties left the boardroom having completed the sale, the seller looked visibly relieved. Again, nothing unusual in that. Selling your business is right up there with bereavement and divorce as far as stressful life events go. But then, as we got into the lift to go down to the lobby and head off home, the seller turned to us and said “thank goodness, I was finding it hard to go on”. He then described the various health issues that had been niggling away at him and affecting his work performance over many years.
In my experience, this is often the way. Business owners won’t go to the market broadcasting that they have health concerns. The risk of looking like a forced seller is too great. Instead, the issues sit there unmentioned in the background.
There a few lessons here. Apart from the obvious one about not sacrificing your health for your wealth (and how many business owners have actually learned that one?!), to me stories like this highlight the imperative to stay in control and exit on your terms. When external issues affect the timing of your business exit, the result is rarely optimal.
And of course, always underwrite your business succession plan with a “Plan B”, for example through key person or ownership protection insurance.