The largest part of the population segment of
the United States is the Baby Boomer generation which consists of 78 million
Americans, born between the years of 1946 to 1964. That is about 25% of a
population that is around 317 million. According to a recent study by BIG
Research, 9% of boomers with household incomes exceeding $50,000 are small
business owners. Using simple math that means 7 million companies in the United
States are owned by individuals 44 – 62 years old.
According to the Family Firm Institute, about
a third of those small businesses will be successfully transferred to their
children. The children of over 67% of those businesses have opted not to go
into the family business. This means that these Baby Boomer owned businesses will
either ultimately be dissolved as the owner faces retirement, fall into the
owner’s estate upon his death, or the business owner will seek a qualified
buyer for his business.
Based on figures from the Exit Planning
Institute, it is estimated that over 8 million privately-held small businesses
will be sold over the next 10-12 years, of which the majority are retiring Baby
Boomer business owners. This is mainly due to the simple fact that over the
next 18 years, Baby Boomers will be turning 65 at a rate of 8,000 every day.
The sheer volume of companies for sale will inherently reduce purchase prices
due to
simple supply-demand economics, otherwise,
more sellers of small businesses than buyers. This reduced pricing provides
leverage to those looking to acquire valuable businesses at a low price.
This is exactly where LD Holdings positions
itself, as a qualified buyer of privately held Baby Boomer owned businesses
with revenues of $25 million or greater. LD Holdings is effectively structuring
itself as the Berkshire Hathaway of small Boomer-owned businesses. The business
model involves acquisition of companies that are fully profitable, entrenched
with experienced personnel, have brand name equity, a solid and loyal customer
base, and consistent cash flow. As the original management retires, a younger
more aggressive management is placed into the business with a more aggressive
business plan focused on maximizing shareholder equity. Due to market
conditions, these companies can be acquired at a discount, allowing for venture
capital like returns, without taking venture capital style risks.
LD Holdings will essentially act as a
business incubator and provide marketing services to portfolio companies via
its joint venture agreement with the Internet Marketing Consortium. Enhanced
marketing will be achieved using e-media, Internet radio, and social media. LD
Holdings will essentially market businesses for sale to a network of accredited
investors that will hold onto their positions for at least a year to maximize
returns and minimize taxes. LD Holdings Business Holding Division will be
responsible for running the operational side of portfolio companies, overseeing
the management of the varied acquisitions to ensuring optimum performance of
each business.
Business owners that are Baby Boomers have
depended on their businesses as a source of income for a significant part of
their lives, and have spent a sizable portion of their life growing their
business. Many will be seeking to turn their businesses into cash as they face
retirement. The sheer number of retiring Baby Boomers will create an excellent
opportunity to cherry pick among those businesses best positioned for future
growth. Patient investors in LD Holdings will be able to capitalize on the
biggest demographic trend to sweep the nation.
For more information, visit
www.ldholdings.com
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