Tom McCullough, chairman and CEO of Northwood Family Office, a Toronto-based wealth-management service, offers three reasons why the widely hyped succession wave never hit the beach:
- The global financial crisis: In the wake of the slowdown that took hold in 2008 and hasn’t really gone away, owners shelved the idea of selling their businesses. “People felt, probably rightly so, that they wouldn’t get their value out of the company.” Since most Canadian SMEs were not hit as hard as big businesses and the banks, he adds, owners have been in no hurry to put out the “for sale” sign.
- Underperforming public markets: If you’d sold your business in the late 2000s and bought bonds or mutual funds, you’d probably still be underwater. “Why would you sell a business that spins off cash and put it in the stock market?” McCullough asks.
- Entrepreneurs are healthier and living longer: While entrepreneurs in their 50s a decade ago might have liked the concept of retiring early, many have put it off once they started thinking about what that really means. “Lots of entrepreneurs are still going strong at 70,” says McCullough. If they enjoy running the business, he asks, “what else are they going to do? Their spouses probably don’t want them home for lunch.” He knows many entrepreneurs who have retired, played some golf, then turned around and started a similar business from scratch, simply because it’s what they do best.
Originally appeared on PROFITguide.com