Today, however, retirement for Baby Boomers looks different. Family businesses are facing a decline in interest of generational succession in many cases. Gen X and younger are not interested in following in their parents’ footsteps, often pursuing careers different to their parents. For rural businesses, children tend to move to cities. Gen X is even tending to retire 10 to 15 years earlier. Effectively, Gen X workers are now retiring before the older generation even decides to.
All this means two things:
- Business owners wanting to retire are retiring in a different way than before.
- There is an opportunity for those in the market to buy a business.
Succession planning now
The Harvard Business Review estimates that “the amount of market value wiped out by badly managed CEO and C-suite transitions in the S&P 1500 is close to $1 trillion a year”.This is a problem with a few angles but can be summarized in two: companies begin to think about their next leaders too late and tend to look outside the business for a new leader first. This is exacerbated by the tendency for Gen X to be passed over for promotions, and those who were preferred (mostly from the millennial generation) not having enough time or experience to prepare to run the business and explains the urge to find someone external. Bad succession planning then is easily explained as this: there is no one to fill the gap left by the Baby Boomer retirement boom, quickly incoming.
