Silver Tsunami & Baby Boomer Business Exits

Silver Tsunami & Baby Boomer Business Exits

Silver Tsunami & Baby Boomer Business Exits

We have all heard the old adage that the only two certainties in life are death and taxes. While that saying is beyond question there is another certainty that often gets overlooked by many business owners. This other certainty states that if you don’t plan your business exit, life circumstances will be happy to plan one for you. We are witnessing life circumstances do just that with a demographic phenomenon known to economists and researchers as the “Silver Tsunami”

Silver Tsunami & Baby Boomer Business ExitsThe phrase “Silver Tsunami” is a term used to describe the mass exit of older Americans from the workforce and business ownership. This generation of older Americans is commonly referred to as baby boomers. According to the Corporate Finance Institute, baby boomers are children of the World War 2 generation who were born between the years of 1946 and 1964 (Who are the baby boomers? 2021). This means that the youngest baby boomers are now reaching age 58 and the oldest are reaching age 76.

Baby Boomers Flex Their Economic Muscles

To understand the impact and influence that baby boomers currently wield over small businesses and by extension the economy as a whole, it is crucial to quantify their numbers. According to the U.S. Census Bureau, in 2019 there were 71.6 million baby boomers in the United States. Pew Research data also indicates that since 2012, baby boomers have begun to retire at a rate of approximately 2 million per year (Hurn, 2021).

What is even more striking is the enormous impact that these “Silver Tsunami” retirees have on small businesses and by extension the US economy. Baby boomers own approximately 5-7 million US businesses representing billions in sales and employing around 24.7 million workers (Marks, 2021). Their retirement represents one of the greatest transfers of wealth in the history of the United States.

The economy of the state of North Carolina is also in the crosshairs of this exodus of baby boomers. According to North Carolina Employee Ownership Center (NCEOC), business owners reaching retirement age own more than 78,000 businesses representing 880,000 employees. These North Carolina-based businesses have payrolls totaling approximately $32 billion dollars and represent revenues in excess of $165 billion dollars.

Silver Tsunami & Baby Boomer Business Exits

Baby Boomer Business Transfers

Baby boomers, like all business owners, have significant resources tied up in their business. Not only do those resources include savings, retirement funds, and home equity but other resources such as time and opportunity costs. A recent survey by UBS reveals, however, that when business owners are asked what they plan to do with their business 52% say that they plan to sell, 20% plan to leave it to family, 18% plan to close entirely, and 10% don’t know (Who's the boss? 2018).

Over half of current baby boomer business owners will need to enter the resale market with their business in order to capitalize on the time and money that they have poured into their businesses.

Silver Tsunami & Baby Boomer Business Exits

Bad News For Some Baby Boomer Business Owners

Unfortunately, the majority of baby boomer business owners who plan to sell their businesses find themselves wholly unprepared to do so. The same UBS study cited above also reveals that 58% of business owners have never had a valuation performed on their businesses, and 48% have no formal exit strategy in place. This lack of preparation puts these business owners at a great disadvantage especially when you consider that according to a study quoted in Forbes only 20% to 30% of businesses listed will actually sell (Biery, 2017).

There are many factors that contribute to unsuccessful business sales such as a lack of motivation on the part of the seller, sloppy accounting practices, and unrealistic price expectations. The root problem, however, according to Inc. magazine is that business owners are just not prepared for the demands and rigors associated with the business sale process (Lonsdale, 2013).

In addition to being grossly unprepared to exit their businesses successfully, over a third of respondents in the UBS survey stated that they had no plan in place to shelter the gains that they would realize from the sale of their business. This creates obvious problems as the minimum tax rate for long-term capital gains is 15%.

Unfortunately, not all assets related to the sale of a business end up getting taxed at the long-term capital gains rate. It is possible that some business assets will fall into the top federal income tax rate which is around 37% (Henricks, 2021).

Connecting The Dots With The Data Points

So, let’s put all of these data points into focus. Our small business-driven economy is being transformed by a wave of baby boomer business owner retirements called the “Silver Tsunami”. This exodus of business ownership represents over 2.3 million businesses and billions of dollars in assets.

Of the owners who will be exiting their businesses, over 50% say that they plan to sell their businesses but less than 40% of them have ever had a valuation done, almost half of them have no formal exit strategy in place, and over a third of them have no plan in place to shelter their gains if they are fortunate enough to be a part of the 20% to 30% of business owners that actually sell their businesses. If the picture painted here sounds pretty dire, it is but fortunately most of the negative consequences surrounding the “Silver Tsunami” are easily preventable.

The demands that business owners have to deal with on a daily basis are numerous. It can be challenging to have even a small amount of time to pause from putting out fires, coaching up employees, handling customer concerns, etc. to consider the big picture. Fortunately, baby boomer business owners have a ready resource for business exit professionals. An experienced and trustworthy business exit professional can help them see the big picture and remove the obstacles standing between them and the ability to capitalize on their business and enjoy the fruits of their hard work.

The value that a business exit professional brings is tremendous. Not only do they possess the skill set and experience that the task requires, but they also are a fountain of good information. A reputable business exit professional will gather data about you and your company, analyze that data objectively, and put together a strategy that is specifically tailored to the unique challenges of your business. They also have the ability to leverage their network of lawyers, financial planners, accountants, and bankers to ensure that you have vetted professional referrals that can handle your situation far beyond just the marketing and selling of your business.

Baby boomer business owners have seasoned wisdom and decades of wise decision-making on their side. They use professionals such as attorneys and accountants to help shield risks and maximize profits. If you are seriously considering the sale of your business, call on us to confidentially guide you through the exit of your business and help put your hard-earned money where it belongs in your bank account!

Works Cited

CFI Education Inc. (2021, September 22). Who are the baby boomers? Corporate Finance Institute. Retrieved February 24, 2022, from

Hurn, C. (2021, November 10). ‘Silver Tsunami’ Means More Business Acquisition Opportunities. Forbes. Retrieved February 25, 2022, from

Marks, G. (2021, November 2). Perspective | why the looming 'silver tsunami' could put 25 million jobs at risk. The Washington Post. Retrieved February 24, 2022, from

BizBuySell. (2021, December). Bizbuysell Insight Report. Businesses for Sale on Retrieved February 26, 2022, from

UBS Group AG. (2018, February 8). Who's the boss? UBS Investor Watch. Retrieved February 26, 2022, from

Biery, M. E. (2017, February 6). Study shows why many business owners can't sell when they want to. Forbes. Retrieved February 26, 2022, from

Lonsdale, D. (2013, March 7). 5 reasons you can't sell your company. Retrieved February 26, 2022, from

Henricks, M. (2021, October 22). Tax implications of selling a small business. SmartAsset. Retrieved February 26, 2022, from