Small business mergers and acquisitions (M&A) have become an increasingly popular trend in 2023, especially with the approaching silver tsunami of retiring baby boomer business owners. According to recent reports, an estimated 80% of small businesses are currently owned by baby boomers, who are expected to begin retiring in large numbers over the next decade. This presents a unique opportunity for entrepreneurs and investors to acquire well-established businesses with a proven track record and a loyal customer base.
One of the main drivers of M&A activity in the small business sector is the popularity of entrepreneurship through acquisition. Rather than starting a business from scratch, many entrepreneurs are opting to purchase existing businesses as a more straightforward and less risky path to entrepreneurship. Buying a business can provide a faster return on investment, established revenue streams, and a proven business model. This can also be an opportunity for entrepreneurs to acquire valuable industry experience, intellectual property, and other assets that can be leveraged to grow the business and increase profits.
Another reason why more entrepreneurs are opting to buy a business instead of starting one from scratch is the increasing difficulty of securing funding for startups. With the ongoing economic uncertainty, traditional funding sources, such as banks and venture capital firms, are becoming more risk-averse and are providing less funding to startups. This makes it more challenging for entrepreneurs to launch and grow new businesses, which is leading many to consider acquisition as a more viable alternative.
In conclusion, the small business M&A market in 2023 is set to be a growing trend, as more entrepreneurs are opting to acquire existing businesses as a more straightforward and less risky path to entrepreneurship. With the impending silver tsunami of retiring baby boomer business owners, there will be a significant number of businesses available for acquisition, providing many opportunities for entrepreneurs and investors to acquire well-established and profitable businesses.