#4 | Is the Silver Tsunami Real?

This was a tough week in the business search process.

Our family has been sick for a good chunk of the month of January and this past week was just trying to keep our heads above water. So I didn’t make much meaningful progress in searching for potential business acquisition targets or reaching out to any owners.

I did want to share something I have been thinking about this week.

Is the Silver Tsunami Real?

The thing that really sparked my interest in buying a small business was this LinkedIn post that I wrote several months ago where I was analyzing the SBA loan data and realized that the pace of business acquisition SBA loans wasn’t nearly fast enough to satisfy the supposed wave of baby boomer business owners that are looking to sell their business.

There are roughly 7,500 SBA loans per year used to buy a business.

If the data around the wave of business owners looking to sell in the coming years is to be believed, I estimated that about 38,000 businesses need to be sold PER MONTH, and the SBA is only supporting 7,500 per year.

Yesterday, I saw another LinkedIn post that backed this up.

The graphic below shows that SBA loan volume for business acquisitions is basically the same in 2023 as it was 5 years ago. There was a bit of a jump in 2021, but I think that was a COVID relief related jump. There were SBA incentives that made it a great deal to use SBA loans for a short period of time in 2021, so I don’t think that was actually related to the “silver tsunami.”

So what gives?

Is the silver tsunami fake? Or has it just not arrived yet?

Here is my hunch:

I think that SBA loans only work well for a small percentage of SMB acquisitions. I think they work best for acquisitions between $1 million and $5 million.

But data from BizBuySell shows that roughly 85% of small businesses sell for less than $1 million.

I wonder if the person buying the $200,000 local salon is using savings, a seller note, a loan from friends and family, a 401k loan, a home equity line of credit, credit cards or some other source of capital to buy the business?

These sales just aren’t showing up in the SBA data.

I have been trying to figure out what data source might prove or disprove that the Silver Tsunami is real and I think I found it.

Google Search Trends Proves the Silver Tsunami is Real

There is the wave!

I did a search for the phrase “Sell a business” from 2004 to the present on Google Search Trends and the wave is undeniable. There is a significant increase in people searching for how to sell a business.

The good news for the sellers is that buyers are showing up. There is more search volume for “buy a business” than there is for “sell a business” as you can see below
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So I am convinced, the wave is real, and I am here to ride it! What do you think?

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