Renate Mueller says Baby Boomers will impact 2011 M&A activity
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Narrator: Author Landon Jones coined the term ‘baby boomer’ in his 1980 novel Great Expectations: America and the Baby Boom Generation, and describes the baby boom generation as those born between 1946 and 1964. 2011 marks the year the first batch of boomers turn 65, an event, according to Renate Mueller, President of Renate M. Mueller Consultants, that will have a significant impact on the coming year’s merger and acquisition activity.
Renate Mueller: I think a lot of the boomers have deferred their retirement plans. Back two or three years ago when we had the problem with the recession and the markets and so on, they (boomers) really wanted to keep what they knew they would get a reasonable return from, which is 1: their salary continuing and 2: the business continuing and their profitability continuing. It was far more secure to keep what you own and what you know then to turn around and sell your business and be faced with, ‘What do I do with the proceeds from my sale?’
What has resulted now of course is we have a stability in the marketplace, more stability in the insurance industry as well, and therefore they’re (boomers) are now saying, ‘Alright, let’s now look at selling. Let’s take a look at what the value of my brokerage is.’
Our activity in valuing brokerages has increased as well on the consulting side so they’re (boomers) much more interested in looking again at the value and is it time to sell? And then of course they look at their advisors as to where they can put their money and protect that nest egg.
Narrator: With baby boomers now willing to sell, it is generation X that is ready to buy. Renate explains:
Renate Mueller: We have a lot of younger people making contact with our firm. When I say younger they are probably 40-45 year olds. A number of them are now employees who now want to become entrepreneurs and owner so insurance brokerages. They may be accepting an inheritance that is coming due and have some cash available. They may have equity in their home that has grown that is now available. Their children perhaps are now out of school and they are the new buyer of the future.
They are in the industry. They see the growth and the opportunity for a good return and they have the energy and dynamics to buy and grow a business.
The other side of the buyers is also insurers are very much interested in acquiring brokerages that are successfully run because they want to protect their market share. So we also have a number of insurers that contact us who are looking to buy brokerages that fit within their strategic acquisition plans.
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