Commentary: Baby Boomer Business Bonanza Looms

By David Fortier 1-5-2025

As per a Globe and Mail, article by 2030 the last of the baby boomer generation will be turning 65. Approximately 42% of small businesses are reportedly owned by baby boomer (madeincanada.ca). As baby boomer business owners retire and exit the workforce there are going to be a number of opportunities for entrepreneurs to take over said businesses.

Northwest Saskatchewan in particular has a number of well established and well -known businesses with owners who will be retiring in the next 5-10 years. Some issues that business owners looking to sell as well as prospective purchasers should consider are:

Legal and tax considerations: These can vary depending on if a company is a corporation, limited partnership, sole proprietor, etc as well as existing contracts, existing employees, leases, should be discussed with a lawyer Changes to the tax code, capital gains, etc should be discussed with an accountant to ensure all parties understand the ramifications. At times the most tax advantaged way of selling a property may be great on paper but not realistic in the open market.

Real Estate: Real estate may make up a large proportion of the value of the business. This may be problematic financing as purchaser may have limited established commercial credit. At times more creative options could be considered including renting the property, rent to own, vendor financing, or selling the business separate from the real estate.

Confidentiality: Many sellers do not want to advertise that they are for sale. Small towns and they don’t want everyone knowing their business, their financials, etc. Worried about what existing and prospective customers will think. What will they think when you close your doors permanently? You can have prospective purchasers sign a non-disclosure agreement. Lack of exposure to the market may mean you miss out on a sale

Exposure of the business for sale: Some business owners end up with a particular business through experience in an industry, circumstance, existing relationships, family, or luck. There are a number of people that would or could become business owners but they haven’t came across an opportunity yet. If they don’t know about the opportunity they can’t act on it. There are a number of entrepreneurial people that may have limited understanding of a particular industry or business but could thrive if they were given the opportunity.

Mentorship: Unless a business is selling to someone already actively involved in that business, or that particular industry it may be tricky to attract someone with limited understanding of the intricacies of a business to purchase it. A seller willing to stay on for a pre-determined timeframe to assist with training and transitioning can go a long way in ensuring the continued success of the business and alleviating potential concerns for prospective purchasers.

Goodwill: Sellers at times place a premium on the value of the business outside the tangible assets. Going concerns can be more difficult to finance. Furthermore, once the principal leaves there goes part of the goodwill. The value in a business is determined by a number of factors including barriers to entry, licensing/professional requirements, existing book of business, existing contracts and transferability of those contracts, established business relationships, name brand recognition. If anyone can start a competing business with yours within a couple of months and the only barrier is capital, that complicates things.

Franchises: Northwest Saskatchewan has had a significant franchise boom in the last 4 years. It may be hard for local businesses to compete with influx of new franchises that may have low overall startup costs, corporate support and training, corporate inhouse financing, regional or national brand name recognition. Some prospective purchasers may look at these options as lower risk than purchasing an existing small business.

Selling a business is a multi-faceted process that requires careful planning to ensure the smoothest transition possible. Consulting with professionals specializing in sales, taxes, legal issues and property valuation can alleviate many of the potential issues that may arise.

Article also ran in Sasktoday

https://www.sasktoday.ca/north/opinion/commentary-baby-boomers-business-bonanza-looms-10026989