We’re entering what’s often referred to as “silver tsunami”. This is the wave of baby-boomer business owners moving toward retirement, and it’s already happening.
In Australia alone, more than 20 per cent of business owners are aged over 60, based on ABS data reported by ASBFEO, pointing to a significant pipeline of businesses likely to transition or exit ownership in the coming years.
At the same time, we’re seeing the largest wealth transfer in history, with estimates of around $3.5 trillion moving between generations over the next 20–25 years, including through to the early 2030s and beyond according to AMP research.
Intergenerational transition
According to KPMG, baby boomers have historically held a significant share of Australia’s wealth and business assets, but are now beginning to sell down holdings as they move into retirement – signalling the start of a major intergenerational transition.
As this generation moves toward retirement, a substantial number of these businesses are expected to come to market over the next decade, creating an increase in supply not typically seen before. Analysis from KPMG highlights a significant generational shift in wealth as Baby Boomers transition assets, with AMP research estimating around $3.5 trillion will transfer between generations over the next two decades.
From a valuation perspective, sophisticated buyers are not just acquiring revenue or brand equity, they are acquiring predictable, transferable cashflows. As highlighted in McKinsey’s valuation framework, the more a business relies on the founder for its operations, relationships, or decision-making, the greater the perceived risk and the lower the value. This is why businesses with clearly defined systems, documented processes, and reduced owner dependency are consistently more attractive, because they offer repeatability, scalability, and continuity beyond the founder.
An opportunity and a filter
And this is where a lot of businesses may get caught out. The “silver tsunami” isn’t just a wave of opportunity, It’s also a filter. Businesses that are systemised, documented, and operationally independent will likely sell, franchise, or transfer well.
Those that aren’t, we’re finding may struggle to find buyers or will have to accept significantly lower valuations. Ton address this issue involves:
- Capturing operational knowledge before it becomes a risk.
- Structuring it into a system the business can run on.
- Making that system searchable, usable, and scalable.
We’re already working with founders in the US, UK, Australia and NZ who are either preparing for sale, preparing to franchise or simply trying to step out of the day-to-day.
Over the next few years, that demand is likely going to increase, because the reality is the businesses that will win in the next phase of the market are not the ones that grew the fastest, they’re the ones that can prove how they run.
This article was first published on Inside Small Business.
