Earlier this year, our publisher attended an event at Sandler Sales Institute about setting up processes, and an interesting tidbit caught her attention: NH has a surplus of successful businesses for sale that no one wants to buy.
The state’s aging population has been widely touted as an area of concern. And, with each year, we are getting a little grayer. The youngest boomers are 56 now and the oldest are breezing by 70. U.S. Census Bureau numbers show almost 550,000 or about 40% of our total population is over 50.
As many business owners consider their next steps, they turn to those closest to assume leadership. But many in NH are finding that their children have no interest in taking the reins. Other NH business owners have turned to their employees and as one financial planning expert put it, “I was given a flat out ‘No’.”
If they can’t come up with a succession plan and it’s not moving with a broker, business owners are folding up shop all together or selling to someone who will move the company out of state. In either of those two scenarios, NH employees are lose their jobs.
Some of the blame is on the business owner. Research at Deloitte shows while 86% of business leaders believe leadership succession planning is an “urgent” or “important” priority, only 14% believe they do it well. But some of the challenge is demographic. There’s plenty of competition for the few buyers out there. According to the 2019 BizBuySell Insight Report, a business sales marketplace, the number of deals reached a record level in 2018. And, while transactions dipped by 5.5% in 2019, the median revenue of the businesses that sold in 2019 increased 7%. A recent search for businesses for sale in NH on the site yielded 315 results.
The NH Business Finance Authority (BFA) is proactively addressing this problem. The organization is studying whether there is a demand for a new state-focused private equity fund to help purchase or invest in businesses. “Too often, family-owned and local privately-held companies cease operations because they don’t have a succession plan or they lack visibility to investors/buyers to grow the company during a period of transition. The purpose of this study is to determine whether there is enough of a market to create a fund to keep these companies rooted in NH,” the BFA states in a recent press release.
The study will focus on companies with at least $5 million in revenue and 25 to 100 employees, primarily operating in the manufacturing and specialty services sectors. We applaud this effort and the BFA for its forward thinking.
Sincerely,
Matthew J. Mowry
Editor