I am always shocked when I speak to a group of business owners about how to increase the value of their companies before they sell, at the reaction I get when I reveal to them the following statistics:
- In 2007 PWC did a survey of boomer business owners and declared that 2.5 million or 70% would exit within 5 years.
- In 2012, we talked to CapitalIQ, the M&A statisticians and asked how many businesses under $500 million in value actually sold over the last five years. After crunching the numbers, they told us less than 200,000
So did 2.48 million business owners get cold feet because of the economy?
Further digging with my network of M&A professionals put this hypothesis to rest. It turns out that an investment bank did their own survey. 90% of owners who attempt to sell either fail to find a buyer or stumble on the way to closing their deal with a buyer.
I could hear a pin drop when I reveal these trends.
Then I hear comments like, How come we donâ€™t know this information? Why didnâ€™t my lawyer, or accountant or the media tell me this?â€ť
Then, pens are poised to write copious notes: Â they want to know how to make sure they donâ€™t become part of that 90% group that fail to sell despite the incredible fact that these are successful companiesâ€¦ for the current owner, not the next owner.
So you will excuse me when I start to wonder how come so many owners donâ€™t know this information and donâ€™t hear about it from the media, their lawyers or accountants, financial planners, insurance agents, estate lawyers, business brokers or valuation experts or even industry trade associations.
Its like all of these powerful trusted advisors and influencers to business owners want to keep the secret.
Until this week.
A miracle has occurred.
The National Post and Financial Postâ€™s Brad Cherniak got down to the nitty gritty aboutÂ what it takes to make a business saleable.
The media is finally writing the truth about what it takes for an owner to sell a business.
But then Brad should know, he just moonlights as a journalist. Heâ€™s an M&A guy in his daytime job. He needs deal flow.
He needs more business owners to wake up and become saleable.
Heâ€™s probably tired of looking at hundreds of deals to find the diamond in the rough that he CAN represent to a buyerâ€¦ because the owner got the wake up call 2-4 years before wanting to exit and is prepared for due diligence and has made the business attractive to an ideal buyer.
Letâ€™s celebrate this milestone together. Which media outlet will get the message next?