The wave of retiring baby boomers will do more than leave Montana with a shortage of skilled workers, it may also leave the state with a glut of businesses up for sale.
More than half of those will likely close or be liquidated over the coming decade.
Shawn Miller, a broker with Murphy Business and Financial in Missoula, has already seen the transition begin. Local business owners who have long been a Main Street staple across Montana are growing older, and many of them will want to sell out and spend their golden years in retirement.
“It has definitely begun, and we’re going to see many baby boomers exiting the market,” Miller said. “It will carry on for the next 10 to 12 years. You’ll see a lot businesses change hands.”
The Pew Research Center estimates that more than $10 trillion in businesses will change hands by 2025. But selling a business takes planning and precision, a fact that’s not often considered by those approaching retirement.
“As a general rule, 20 percent of the businesses are for sale, and of those only 20 percent eventually sell,” said Miller. “You’re really going to have to posture your business to be a good, viable business with things we can help you do to create value. As those baby boomers exit and there’s more things on the market, it’s definitely going to drive prices down.”
While every business is unique, Miller said the process of selling follows a few simple rules. Typically, it starts when she’s approached by a business owner considering selling their business.
What follows is a deep evaluation of tax returns, internal financial statements and in-depth interviews with the owners. If they decide to list, Miller said, Murphy Business and Financial places it on the national and international market.
Starting the process sooner rather than later is advisable, she said.
“If you come to us early enough, we can advise you on what changes to make to bring more value to the business,” she said. “Unfortunately, a lot of people wait, and an event will happen in their world where they wake up one day saying they have to sell the business. Unfortunately, at that point, we can’t help them correct anything or change anything to add value.”
Murphy Business and Financial was founded in Florida in 1994 and has since grown into one of the nation’s largest business brokerage firms. It franchised into Whitefish in 2007 and now claims offices across the state, including Missoula.
Miller said the firm sells businesses valued from $250,000 up to $20 million. Most of those sales are confidential, though many of the buyers come from out of state looking to live the Montana lifestyle while netting an income.
“Typically, we find that 80 percent of our buyers come from out of state to purchase,” she said. “They come here to vacation with their family and leave wanting to live here. They’re tired of the corporate America job and want to do something for themselves, so they look at buying a business that will immediately start generating income for them.”
According to Pew Research, 1.5 million Americans turned 70 years old last year and will do so every year for the next 15 years. As a result, 40 percent of family-owned businesses in the U.S. are expected to change hands in the coming years, along with 70 percent of small U.S. companies.
That’s 10 million business that will likely hit the market over the next decade. It will likely represent the largest transfer of business control in U.S history.
Montana won’t be excluded from the transition.
“Our sellers are coming to us because they don’t want their employers, customers or vendors to know that they’re for sale,” said Miller. “We can work through the whole process from the time they list it to an offer to closing without anyone knowing until the seller walks in and introduces the new owner.”