The demographics of those looking to buy businesses is changing.
Credit: Handshake image via Shutterstock
Baby boomer business owners looking to sell their companies should be targeting young minorities and women as potential buyers, new research shows.
A study by BizBuySell.com revealed that a new group of younger and more diverse small business buyers has entered the business-for-sale market. While 87 percent of buyers 65 and older are Caucasian, that percentage declines significantly as the buyer's age decreases.
The research found that the number of Hispanic, African-American and Asian/Pacific Islander buyers increased dramatically in lower age brackets. There were 7.5 times more Hispanic buyers between ages 18-29 than over 65, and younger African-American buyers outpaced older buyers by a multiple of 6. Among Asian/Pacific Islanders, only 4 percent of buyers were over 65, while 19 percent fell into the 18-29 age bracket.
In addition to the increased diversity among young buyers, the study discovered a bump in the number of women who are interested in business ownership. While women represent just 9 percent of buyers over 65, buying activity for females was much higher in younger age brackets: 19 percent between ages 50 and 64, 20 percent between 30 and 49 and 23 percent between 18 and 29.
Those minorities and women interested in buying a business should have plenty of opportunities to do so in the coming months. While the recession delayed retirement plans for many business owners, it appears they are now feeling more confident about the market and are ready to sell, with 97 percent of owners 65 and older planning on selling their business in the next five years. Additionally, 57 percent of those are expecting to do so in the next six months.
While more than three-quarters of the older sellers surveyed are planning to retire once they unload their business, 11 percent said they will focus on another business venture. The opposite is true for younger sellers, with the vast majority much more likely to either reinvest sale proceeds into another venture or take the money and find a full-time job.
Overall, the study found that the small business transaction market grew substantially in 2013, ending the year with sales up 49 percent over 2012 volumes.
The survey was based on more than 2,000 small business buyers and sellers.