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Silver tsunami is running late
The prediction
A decade ago, the expectation was a silver tsunami. The demographic data showed that the vast majority of owners of small and medium-sized businesses were old and getting older, and the wave of sales was expected to crest within two to three years.
Why it slipped
It did not turn out that way. The businesses a private equity firm like Permanent Equity buys have more than three million dollars in free cash flow and are typically closely held, so the owners are wealthy before any check is written. Those owners are living longer and working longer, because of advancements in health care, especially on the wealthier side.
Where it stands now
Years of COVID, interest rates, tariffs, and wars have added instability, which also keeps people working longer. The result is a 10, 12, or even 15-year shift in retirement among many owners. The silver tsunami is cresting now, probably over the next five years.
How do baby boomers drive the silver tsunami?
Baby boomers were born between 1946 and 1964, making them one of the largest generations in American history. The first of them turned 65 in 2011. The U.S. Census Bureau has noted that all baby boomers will be older than 65 by 2030.
Why do longer lives delay owners' retirement?
The National Center for Health Statistics reports that U.S. life expectancy at birth rose from about 68 years in 1950 to about 79 in 2019. Longer lives stretch the span in which an owner can keep working. Owners of closely held businesses are often also the key decision-maker, so leaving means replacing them.
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