What Retirement?

Sitting on a boat watching the sun set on a warm Florida evening in March, Tom Garrity jokingly asks how the weather is back in NH. The 71-year-old doesn't exactly miss the recent snowstorms that blew through the Granite State - he's "busy" living the retirement dream.

Garrity sold Adams Marina on Lake Winnisquam in Tilton for less than $5 million last spring. "I had 23 good years and we enjoyed it," Garrity says of his former business. "It was time to have more time for myself. Finally after 23 years, we have time to boat."

When Garrity decided to call it quits, he called NH Business Sales Inc. to sell his marina. The business brokerage firm had helped a friend of Garrity's successfully sell a marine business.

With a sea of "baby boomers" about to dive into retirement, firms like NH Business Sales are anticipating brisk business for years to come. After all, that generation got its name from the record 75 million babies born between 1946 and 1964. Since then, that generation has redefined everything - from the way we do business to entertainment to technology. So why wouldn't they redefine what it means to retire?

Yes, there will be many who will sell businesses and then flock to golf courses and jet around the world. Others, however, will see their golden years as a chance at a second career and buy a business.

According to BusinessesforSale.com, an online business marketplace, there will be more than 30,000 small- to medium-sized businesses bought and sold in the United States in 2007, with most selling for $5 million or less. About 40 percent of those transactions will involve a boomer. During the past five years, there has been a 55 percent increase in the number of baby boomers buying businesses.

Other industry watchers says such data is simply "guesswork." Tom West of Business Brokerage Press in Westford, Mass., says boomers have always made up the bulk of buyers and sellers. With that age group's growing number of retirees, West has seen increased business brokerage activity in the last few years.

For business brokers, the boomers - now between the ages of 43 and 61 - are dreams come true. They have valuable assets, money to spend, business acumen, and are serious about sealing the deal. "Our whole business model was spawned from that demographic shift," says Michael Coyle, owner of CenterPoint Business Advisors Inc. in Littleton. "Business has been great."

Coyle worked in real estate for five years while providing business brokerage services. However, seeing the pending influx in boomer business, he decided to switch to business brokerage services full-time two and half years ago. His company deals in businesses that generally sell for $250,000 to $5 million. Last year, 69 percent of his sellers were people looking to retire.

While boomers are finding their way to business brokers, brokers are also courting the boomers. Louis Pereira, owner of The Herold-Lambert Group Inc. a business brokerage firm in Salem, sends letters to potential customers. "You know where to buy your TV set, whereas what I do for most people is a once-in-a-lifetime service. When they need me they need me, but I'm not at the front of their mind." He has been at the front of more minds lately, though. Pereira used to get one call a week from boomers looking for business appraisals. This year, that number jumped to three to four a week.

That number will likely continue to grow. From 2000 to 2010, the number of people aged 55 and older is projected to grow from 20 to 29 percent of the NH population, according to the NH Office of Energy and Planning. By 2020, they are projected to be 38 percent of the population.

And they've been putting thought into their futures. Drew Nelson was in banking in 1988 when he attended a course at the Stanford Graduate School of Business in

California where the teacher asked how many people wanted to stay with their current employers until retirement. Out of 60 people, two raised their hands. When asked how many wanted to own a business, all but two raised their hands. "That was a wake-up call for me," says Nelson, who is nearing 62. In 2002, he and his wife bought the Board & Basket, a kitchenware store in West Lebanon. "I had always had that idea in the back of my mind."

NH's Market

So what's the marketplace like for those "retiring" boomers? Pereira compares NH's business landscape to a pyramid with most businesses selling for $200,000 or less, and increasingly fewer as you reach $500,000 and into the million-dollar-plus apex. Sellers are putting all types of businesses on the market, ranging from hospitality to retail to construction to manufacturing. While smaller companies that are sold tend to stay in-state with their customer base, larger businesses that sell for $3 million to $50 million are usually purchased by out-of-state companies, and in most cases move out of NH after a transition period.

Small companies continue to be a hotbed of sales activity. BizBuySell.com, the country's largest Internet business sales marketplace, had 289 NH businesses listed for sale in late March. Most are in the hospitality, retail, or service industries, and most are listed for under $1 million. Phil Steckler, a principal and vice president of Country Business Inc., which covers Northern New England, sees more equity groups getting involved in smaller deals lately - those valued at a couple million instead of $25 million.

Making the Deal

Boomers are bringing considerations other than bottom-line finances to the bargaining table. Take the sale of Garrity's marina. Garrity didn't just want to get a big check and gosouth. He wanted to make sure the new owner would take care of his customers, whom he considered friends.

Such a desire is not uncommon among boomers who have invested their lives in a business. "It's about selling a vision," says George T. O'Brien of G.T. O'Brien Inc., a Manchester-based business brokerage firm serving the Northeast. O'Brien deals in the merger and acquisition market, working with people selling larger businesses for $3 million to about $50 million. "They built up the company. It's a significant portion of their net worth and it's probably the biggest asset they'll ever sell."

It's also a sale that will only happen once, so doing right by customers who will then recommend future customers is paramount for brokers. Managing the personal side of a deal also involves working with different age groups, and that generation gap is getting increasing attention. The new dynamics led the International

Business Brokers Association (IBBA) to discuss that generation gap at its meeting last year.

Boomers who are selling businesses worry that someone who is 30 may not have the knowledge to successfully run it, says Maurice A. Desmarais. president of the IBBA. "It's become more prevalent now. It's a whole new set of dynamics in terms of interactions."

Coyle of CenterPoint is very aware of that difference. Like all brokers, he is working primarily for the seller, but his brokers play an increasing role as bridges between the generations.

He says his brokers are able to "speak the language of that younger generation" while also helping the sellers understand and access a group of buyers they might not otherwise be able to reach. And that bridge will become more important as more boomers enter the marketplace in coming years.

The Art of the Deal

Whether a business is on the market for $5 million or S50 million, brokering a deal is a lengthy process that generally takes about a year. The first step is making sure the buyer is serious, and boomers and older sellers usually are, brokers say.

"It's a waste of our time to deal with someone who is just testing the market," says Leon M. Parker, president of New Hampshire Business Sales Inc., headquartered in Meredith. "We need to get what their compulsion is." Parker has a commission floor of about 10 percent, similar to that of other brokers willing to disclose their rates.

Buyers and brokers then need to agree on a business's value to provide a broker with confidence they can sell it. Valuing a business involves accounting for tangible assets, such as real estate and equipment, as well as intangible assets, such as the business's reputation, O'Brien says.

That can get tricky. "In a service-orientated business heavily dependent on sales, a company might be worth what's being offered, but the question is, is the buyer capableof operating it at the same level," says Michael Losapio, a valuation expert and owner of M.P. Losapio & Co., LLC in Exeter.

Many brokers turn down businesses they don't think they will sell. Given that numerous brokers agree that 30 percent of businesses never sell, they say they have reason to be picky. But with the number of boomers who will be retiring in the coming years, they'll have plenty to choose from.