Baby boomers’ heightened awareness of legacy combined with a penchant for owning businesses is leading to the extraordinary circumstance of 10 million owners searching for the same thing: a buyer who not only has the cash, experience and interest in buying a business, but a concern for the legacy they will inherit with it.
OneAccord Capital was founded to help fill the gap between the huge number of businesses starting to hang up For Sale signs and the relatively few buyers. No single firm can put up the $10 trillion set to change hands over the next decade, so the question on the table is:
Can Boomer Business Owners Find Buyers Concerned with Legacy?
First, let’s spell out what we mean by legacy. The most basic move a buyer can make to preserve legacy is retaining the name and location of the business. If you buy Jimmy’s Hardware in Kent, WA, renaming it Kendra’s Hardware and moving it to Bellevue wipes out the memory of Jimmy and his hardware store. While it might technically be the same business, practically it’s a new creation and Jimmy’s legacy is gone. After OneAccord Capital bought Graphic Label Inc., they turned it into an LLC but kept the name. The logo still reads GLI, the name is still Graphic Label, Inc. and its headquarters are still humming along in Yakima. This is preserving a legacy—continuing to build, without tearing down.
Caring about the previous owners may sound like a nice thing to do, but the cold, hard fact is legacy is good for business. Keeping the name on the sign and the employees who kept the business running for years—these actions retain value. There’s value in the name of the company and the experience of the employees. Creating awareness around a new name takes time and money, as does finding new employees; preserving both does not.
Business is about relationships. Good relationships equal good business, so keeping on employees, customers, vendors and continuing the company’s role in its community is good business. The established knowledge and relationships keep the organization running and allow for a clear path to growth. They also give the new owners time to learn the business from top to bottom so they’re better equipped to create this growth. Demolishing the company and rebuilding doesn’t make sense when you’re trying to turn a profit.
If a business owner is worried about their legacy after they sell, they can rest assured there are compelling reasons for a buyer to preserve and expand their legacy. The ironic thing is the number of buyers who are willing to buy a business, demolish it and then flip it for a profit. These buyers are in greater supply than legacy buyers, so while it is possible to find the right buyer, it's going to take forethought and work.
Attracting the Right Buyer
A couple things to keep in mind for the business owner in search of a legacy buyer are 1) preparing their business is essential and 2) their broker is their ally.
Buyers are looking for a good investment. A well-run organization with a strong foundation, consistent earnings and a clear path to growth is a great investment. Even if a business isn't ready to sell today, some hard work can turn it around and make it an attractive investment. Taking the time to prepare a business for sale pays off when a legacy-focused buyer comes along and isn't scared off by crippling issues in the business.
The broker who markets such a business and vets potential buyers needs to know from the start that they're not auctioning the company off to just anybody with the cash. From the very beginning, owners need to be specific about what's important to them and what they're looking for so their broker can find the right match.