The Silver Tsunami of Small Businesses for Sale is Here

In late 2023, I fell down the rabbit hole learning about the so-called “Silver Tsunami” of baby boomer business owners who will be looking to retire and sell their business in the coming years.  I started with this study by Live Oak Bank that stated 29% of small business owners expect to transition ownership in the next 5 years.  

This means roughly 2.3 million small businesses will be looking to sell in the next 5 years.  I did my best to find data on the current number of small businesses that are being acquired each year and what I found was pretty shocking. 

• Based on my analysis of SBA loan data it looks like there are only about 7,500 businesses purchased with an SBA loan each year.  
• Based on business sale data from BizBuySell (which is likely the largest small business listing site) there are about 10,000 businesses sold on the platform each year.  
• I also expect many of the businesses solid on BizBuySell were purchased using an SBA loan, so there must be some overlap here.  

I estimated that there might be about 20,000 small businesses sold per year based on the data sources I could find. 

In order to sell 2.3 million small businesses in 5 years, we need to be at a pace of selling 38,000 small businesses per MONTH! 

20,000 SMBs sold per year  VS.  38,000 SMBs that want to sell per month

That looks like a massive supply and demand mismatch.  

When there is a mismatch between supply and demand there is opportunity.  

So I started to dig into this a little deeper and realized that all of the SMB experts that I follow on LinkedIn and X (Twitter) seem to talk about acquisitions of small businesses valued at more than $1 million dollars.  

Most of the business brokers, loan brokers, due diligence experts, SMB lawyers, etc were all talking about larger deals because those are the deals where the buyer and seller can actually afford these professional services.  

In my mind I would have guessed that most small businesses sold are for greater than $1 million.  

It turns out that more like 90% of small businesses are sold for less than $1 million.  

Here is the data from BizBuySell:

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This means 84% of small businesses sold on BizBuySell have been for $1 million or less.  

Here is the problem for the 90% of SMBs that would likely be valued at less than $1 million.  

I don’t think the standard small business acquisition playbook works.

My theory is that if small business owners use the “standard” playbook for selling their business worth less than $1 million, most of those businesses will never end up selling at all.  

This is pretty devastating given that according to Indiana Business Advisors 78% of business owners intend to fund 60% to 100% of their retirement through the sale of their business. 

I decided that it sounded kind of sad to be constantly letting down small business owners who are trying to sell their business and retire when I have to tell them that their business isn’t worth what they thought or that they won’t receive as much cash as they hoped for, but it could be a lot more fun to try to help buyers find creative ways to buy small businesses valued at less than $1 million where the normal playbook just doesn’t work.  

That is why I decided to start SMBuyer and try to help just a few more folks become small business owners.  

Next I get into why I think the standard playbook for selling a business won’t work for most SMBs valued at < $1 million dollars - What Makes a Small Business Unsellable? (Hint: It’s the Fees)