Are Baby Boomers Finally Ready To Sell?

What’s Driving Exits In 2025?

Chris Goebel

MBA, CEPA, CFBA, CBI
Founder & President, Crossroads Advisers

Intro

The Baby Boomer generation cohort is approximately 70,000,000 strong. They own an estimated 12 million privately held businesses in the U.S. By 2030, the entire generation will be at or exceeding the traditional retirement age of 65. Much has been written about an anticipated “silver tsunami” of Boomer ownership transfers. M&A advisors and investment bankers need a strong understanding of the assumptions, dynamics and trends at play as Baby Boomer owners prepare to exit.

It is incumbent upon advisors to set realistic prices and expectations with Boomer owners. This is increasingly difficult right now. Volatility and uncertainty in geopolitics and trade policies in 2025 make business planning, estimating the price of goods and calculating valuations challenging. This is resulting in some seller and buyer reluctance, regardless of the age of business owners.

Market Dynamics & Deal Volume

Economic climate impacts on Baby Boomer-driven exits

While interest rates remain at their current levels, some sellers are reluctant to exit. Buyers are looking at acquiring a business with higher rates that they have to pay back to their investors. On the private equity side, they’re more conservative in their offerings. Naturally, sellers want to get as much as they can get for a sale, but since buyers are offering less, some sellers are holding out before they take it to market.

Expectations of a “Silver Tsunami”

Deal volume is picking up with Baby Boomer sellers, but we have to remember that a large portion of these individuals own lifestyle businesses, which are not always easy to sell. With a lifestyle business, sometimes the owner has to weigh staying in the business and then closing the doors. They consider what they’re making in the business, versus trying to sell it and getting less of a selling price.

Boomers were born between 1946 and 1964, and where sellers fall within that timeline can affect the buyer landscape. Today’s Boomer sellers have similarities and differences from those five to 10 years ago in terms of preparedness and expectations.

The similarities include:

• Value Expectation – What they are looking to get for their business doesn’t often align with the market value and what someone is willing to pay for their business.
• Seller Preparedness – Their business and exit readiness (both on a personal and business basis) is still very low. They don’t really take the steps that they should to prepare their business for sale. A lot of that preparedness really looks at de-risking the business, which adds value.

One key difference today is that the Boomer seller management teams and the key people they have in place are generally only a few years younger and approaching retirement, themselves. This creates a problem for buyers, who want to retain all of the intellectual knowledge and capital of not only the owner, but also the employees who helped build the business.

Buyer Landscape and Shifting Demand

The evolving buyer pool for $5M-$50M businesses in 2025

While private equity firms, family offices and strategic buyers still lead the charge, there are increasing numbers in the 30-to-40 age group searching to buy their first businesses. There are organizations and angel investors to support them in their Entrepreneurship Through Acquisition efforts. Family-business centers associated with universities actively seek younger buyers.

Are buyers still willing to pay top multiples for owner-dependent businesses?

That depends on the buyer and whether the business fits a specific niche that they’re trying to fill. If not, there is a lot of inherent risk. That risk is compounded if their biggest customers’ primary relationships are with the business owner. This is still a very hot topic for anyone looking to buy a business. It impacts value and transition time. Just as it is with securities – the more risk, the cheaper the stock – the less risk the higher the stock.

Which industries are attracting strong buyer interest?

How the buyer is capitalized – whether it’s an individual for the first-time business, strategic buyer or private equity firm – makes a big difference in determining the industries they’re going after.

• Most businesses that fall within the $2M to $10M range in sales revenue need help in positioning the business for sale. Those that don’t position themselves well are not as attractive, which affects who is going to pursue and acquire them.
• In some cases, sellers are holding off because their business is not in position to be the best-in-class business on the market. They prefer to wait until people are trying to buy their type of business and are willing to pay more.

Structuring & Closing Deals in Today’s Market

LMM Financing trends

The latest M&A Source® Market Pulse Survey tracked $5M-$50M deals from 2021 to 2024. Respondents reported that sellers received about 83% of total consideration as cash at close on average. Seller financing accounted for 10% or less in most of these transactions.

Lower middle market deals may involve SBA financing and a seller’s note. This is particularly common with first-time buyers. In these deals, the seller’s note is secondary to the SBA loan, which may prolong the time that the business owner will be paid in full for the business.

The prevalence of off-market transactions

There are an increasing number of online platforms where advisors or sellers can advertise a business online, but the vast majority of deal sourcing is done by trusted advisors (attorneys and accountants), matchmaking a buyer to opportunities and referring a seller to an advisor who can help them sell their business.

The most common reasons that Boomer-driven deals fail

In this demographic, how the business is positioned and the price are the primary factors. Buyers are keenly focused on the next level of management or key employees to feel comfortable in making the investment. Baby Boomers often want to be out the door. Owners need to be more open to staying on with the business so that critical information can be transferred successfully. If not, it will hurt the business, the buyer and the employees. To mitigate risk, advisors need to educate owners and set realistic expectations on price and transition time for a successful sale and fulfilment of their legacy.

Preparing Baby Boomers for a Successful Exit

A helpful analogy

When there is not a precipitating event or situation that requires a sale as soon as possible, many Boomer sellers relate well to this exercise to understand the need for a minimum of three years’ preparation.

• Ask them if they have ever gone for a loan. Most will say yes.
• If so, ask them what information they had to supply to the bank. They list the financials and the number of years they covered, which is generally three to five years.
• Inform them that it is no different when you want to sell your business.

Sellers have to provide at least a three-year look-back on financials for someone who is interested in buying their business. The owner needs to position at least three to five years out so that they can hopefully make some changes, continue to make it grow and demonstrate that to a potential buyer. At its core, exit planning is business planning.

Handling emotionally attached sellers with unrealistic valuation expectations

Some Baby Boomer owners are never going to sell. As the saying goes, they’re going to “die at their desks.” This age group looks at selling their business as though they were planning their funerals, so it is not easy for them to make the decision to sell. Unfortunately, the longer they wait, the less value their business may have.

For those who are interested in selling, doing a detailed financial analysis of the business is helpful. Numbers on the financials don’t lie unless they’re doing something wrong. They have accountants, they do the tax returns, so it’s consistent. When you have a base of information that’s objective and factual, you can have an honest conversation with business owners. They may tell you they want a certain price for their business, but their financials are going to tell a buyer what it’s worth. Sometimes things are decided on emotion, but you can always bring it back to them with objective, factual information. It goes a long way to reduce the emotion and unrealistic expectations.

Pre-sale operational improvement and maximizing business value

This plays a very critical role before going to market. Unfortunately, as an advisor, you’re not always dealt those cards. When you have the opportunity to work with clients on business value-building, you can generate increases of 30 percent or more of enterprise value.

Understanding their business, you can help them look at areas that are higher-risk for a buyer and counsel them to reduce those risks by making improvements. Once they take steps to improve and professionalize their business, they create the space to step away more and make it less owner-dependent. In addition to enhancing the enterprise value, it’s going to be that much easier for you to demonstrate the growth factor, find the right buyer and sell the business.