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You Haven’t Completed M&A Due Diligence Until You Know a Target’s Material Margin
Strategex and PitchBook collaborated on a report published: "A Coming PE Surge." Learn how demographics could fuel a generational dealmaking spree in the lower middle market.
The corresponding article summarized a much-discussed confluence of trends that many believed would fuel near-record buyout activity – namely, Baby Boomers’ offloading of assets and businesses in their transition to retirement.
That article (written by Andrew J Sherman) was published by CNBC at the end of 2019. While a historic buyout boom did, in fact, occur in late 2020 to early 2022, that dealmaking spree was not fueled by the retirement wave. In fact, many Boomer-owned businesses postponed exits and retirements during this stretch of heightened economic uncertainty.
But now, conditions might finally be ripe for a generational-fueled buyout boom. Baby Boomer owners are now increasingly less likely to postpone retirement as actual retirements continue to greatly outpace forecasts. Moreover, a recent survey of U.S. business owners found that 40% regretted not selling their business in the early 2020s and are actively planning for a transition or exit.
If only 15% of the estimated 2.3 million Baby-Boomer-owned businesses are potentially looking to come to market, based on previous aggregate revenue estimates, that could represent 345,000 businesses generating well over $500 billion in revenue.
Even if drawn out, such an array of prospective lower-middle-market dealmaking opportunities is the largest bonanza in years for PE fund managers and owners alike.
The Opportunity
$500B
If 15% of Boomer-owned businesses come to market, that could represent 345,000 businesses generating over $500 billion in revenue.
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