As we are all painfully aware, none of us are getting any younger. This is especially true of aging baby boomers. The reality is throughout the next 10 years, baby boomers are expected to retire in droves. As they retire, they will be taking with them decades of institutional knowledge that will be difficult to replace.
This trend is most likely going to impact smaller privately held companies even harder given that many are also owned and lead by baby boomers and typically have much smaller work forces from which to groom knowledgeable replacements for retiring experienced workers.
Recently MiddleMarketGrowth.com published an enlightening piece that examines this movement in great detail. This is how they described the current employment trend:
Despite the doom and gloom of recent economic news, the middle market continues to outpace large-cap companies and global corporations in business growth, M&A and workforce expansion.
Most middle-market business leaders are well aware of the “war for talent” that exists today. Attracting and developing talent has been and will continue to be the No. 1 constraint on growth for midsize companies. The bad news is that this war is expected to intensify over the next five to 10 years due to significant changes in the workforce. On the bright side, however, small and midsize companies have an opportunity to compete—and win—against large corporations.
The “significant changes in the workforce” mentioned above revolve around two interrelated issues. One, I have already mentioned: the ongoing retirement of talented baby boomers. A corollary issue impacting this trend is that the next age cadre that should replace this group are GenXers. Unfortunately, this group is much smaller than the baby boomer generation, which means that millennials will be taking up the slack.
The good news, according to MiddleMarketGrowth.com, is that millennials make up “the largest generational U.S. workforce in history. Born between the early 1980s and the early 2000s, this group has already surpassed the two older generations in workforce size. According to the Pew Research Center, millennials accounted for more than 53.5 million employees in 2015.”
The bad news? Well, they are millennials. OK, so much has been made over the years about this younger generation and its ills. The reality is every generation has been characterized by its elders as having its own set of negative issues.
The fact is: You most likely will need to recruit a set of millennials to replace your key aging baby boomers eventually. Rather than bemoan that fact, the good folks at MiddleMarketGrowth.com (the brilliant article was actually penned by Dan Hawkins, a seasoned business executive and former chief human resources officer and founder of Summit Leadership Partners) provided great advice for how to, instead of fighting this trend, actually position your company to find the best and brightest replacements possible.
Hawkins offers these practical suggestions for business leaders to accomplish this:
Back in early 2014 we published a piece that examined the need for business owners to expand their marketing focus beyond just the traditional one, which for decades has been on baby boomers. From a business development standpoint, the reality is as maligned as they are, millennials are going to drive our economy starting in the early 2020s and for the next thirty years. Companies need to adjust their marketing and sales for this new reality to survive.
The same is true for the hiring, mentoring, and retaining of millennials as employees. The bullet points above have some GREAT ideas that I have taken the liberty to highlight. I am looking at this issue of baby boomer retirement/millennial hiring from a buyer’s perspective. If you are a buyer, one of the most important due diligence itemsyou examine is a target’s employee base, talent pool, and HR policies. If you as a buyer encounter a company comprised of aging baby boomers in all key positions with no bullpen of talent developed, you are going to be very concerned.
The great news is that with a new focus on what drives these younger folks, what truly motivates them, you can create a “buyer ready” business that can thrive even as you face the retirement of your key, long-term folks (and even yourself).
One of the most important issues to understand is that unlike baby boomers, millennial employees care more about seeing how their work fits into a bigger picture, a higher calling if you will. Therefore you need to create positions that help them see that.
But even more importantly, as Mr. Hawkins so clearly points out, you have to tap into the institutional knowledge of your baby boomers long before they retire, and if possible, create mentoring programs so that they can transfer their years of experience prior to retiring (or worse yet, exiting this mortal plane in an untimely fashion).
Now for the Hard Part
This could be a huge challenge as you are faced with helping Bob, who has worked in your shop for 40 years, transfer all that unwritten experience to someone in his/her 30s with tattoos and piercings. I only am half-jesting here. The point is if you own a privately held company and you have key baby boomers heading to retirement in the next few years, you need to be very proactive and get ahead of this curve.
If you don’t, it may impact your ability to find a buyer for your business. Or at least close an optimal deal. I recall meeting with a client a few years ago when we were valuing his company. We were discussing factors driving his success and he said to me, “You want to meet why this company is successful?” He took me to his shop floor an introduced me to his key employee, a grizzled veteran of ages, who had started working the CNC machines in his shop while still in high school. The owner was justifiably proud that this fellow had been with the company, doing the same job for nearly five decades. Unfortunately, I had to help him see the situation as a buyer would. With no backup trained, no mentoring in place, and no production manuals in existence, this situation would be seen as a potential risk.
Bottom line: As much as you may not like the idea, your key folks will be retiring. Even more anathema to you is the idea that a millennial may be the person you need to hire and develop. As soon as you get over this and plan for the future, the better off your company will look to buyers coming in to view it.
Or course this is just one issue you will face when you enter the market looking for buyers for your business. The good news is that Generational Equity, a middle-market M&A consulting firm, has helped hundreds of clients navigate these waters and successfully find buyers for their businesses.
No matter what you do, even if you are not planning to sell for 10 years, begin to groom replacements for your aging baby boomers. For many of you, your businesses continuity will depend on it.
Carl Doerksen is the Director of Corporate Development at Generational Equity, part of the Generational Group.
Generational Equity’s assistance was invaluable in compiling and marketing our business.Bil MacLeslie, CEO, ipHouse
We will highly recommend Generational Equity and Musa Jagne to any business owner about to embark on the same process.Karen S. Williams, CFO, BW Manufacturing
I must say that I have never worked with a more driven, competent and focused individual as Don Ho.Jay Dinnison, Owner of Sharpe Mixers
Your wisdom and experience were invaluable to me during this once-in-a-lifetime transaction.Ralph Noblin, President of Noblin & Associates
Thanks again Phil and feel free to have a future client call me if they would like a referral. You are a true professional!Andy Graham, Vice President, Modern Heating & Plumbing
I would like to thank you and your firm, Generational Equity, for being our valued advisors in our journey.Bil MacLeslie, CEO, ipHouse
Thank you again for all your guidance and support. Any company will achieve what they intend, if they have you on their team!Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Tom Staszak is one of the most professional people I have dealt with in my last forty years of business. You’ve got a great group of people and you have built a truly professional organization.Michael J Polarek, President, Paragon Packaging
We were happy to see the interest in our company and what we cherished has not just a valuable company but an important company to the communities we served in.Larry Moore, Owner, A Company Portable Restrooms
We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
I couldn’t have asked for a better team than Michael and Deborah. We couldn’t have done it without them.Robert Evans, President and CEO of Mealtracker Dietary Software
Michael worked tirelessly, He followed every lead meticulously and urgently to make sure nothing was missed.Robert Evans, President and CEO of Mealtracker Dietary Software
The help you provided us during each step of this process made us feel very comfortable and confident we were selecting the right approach to transition our Company.Andy Graham, Vice President, Modern Heating & Plumbing
We knew it would be a difficult task to have someone really understand our business and our market, prior to researching a possible buyer, so it was imperative that we found someone of your caliber, with definite proven experience in this area.Rick Nowak, President/CEO, Kurz Electric Solutions, Inc.
Greetings Mike. Thank you for the captivating and compelling presentation you made at the Phoenix presentation last week. Over many years in business yours was the most informative and well-presented presentation, on any subject, that I have ever attended! Your energy and enthusiasm combined with your concise and captivating support of your positions with easily understood examples and data was compelling.Pete L.
We thank you Eric and Generational Equity making our dream come true.Larry Moore, Owner, A Company Portable Restrooms
We are extremely pleased with the way Generational Equity handled the sale of our company. Your associates, Tom and Chris, did an outstanding job of getting us (me) through the process.Michael J Polarek, President, Paragon Packaging
Generational Equity educated and informed us – so that we could be on the upside of a good decision (to sell).Bil MacLeslie, CEO, ipHouse
Bruce and I wanted to take this opportunity to thank Generational Equity for assigning Musa Jagne to our transaction. In Bruce’s words, “Musa did one hell of a job for us!”Karen S. Williams, CFO, BW Manufacturing
The process was much more involved than I expected and your help, experience and advice was a big factor in making the negotiations go as smoothly as possible.Terry D. Wickman, President, Keytroller
I wanted to write you a quick letter to express our appreciation and our delight on the outcome of helping us through the process of our recent sale. We are very happy with the end result, and are very happy to be able to move forward with all of our future growth plans.Terry D. Wickman, President, Keytroller
I quickly recognized that Don was working for Sharpe Mixers above all else, and held our interests above others.Jay Dinnison, Owner of Sharpe Mixers
The information we learn from customers helps us personalize and continually improve your experience. Here are the types of information we gather.
We receive and store any information you enter on our Web site or give us in any other way. We do not sell or rent your personal information to others without your consent. We use the information we collect only for the purposes sending promotional information, enhancing the operation of our site, serving advertisements, for statistical purposes and to administer our systems. We DO NOT use third parties to provide customer service, to serve site content, to serve the advertisements you see on our site, to conduct surveys, to help administer promotional emails, or to administer drawings or contests, but reserve the right to do so in the future without advance notice.
Generational Equity, LLC’s affiliates are all part of one corporate family, they work with one another and may work together to provide services to you. The sharing of your information among affiliates enables Generational Equity to serve you more efficiently and makes it more convenient for you to do business with Generational Group. Generational Equity is permitted by law to share information with its affiliates. All of our affiliates follow similar privacy policies.
For reasons such as improving personalization of our service, we might receive information about you from other sources and add it to our account information.
Generational Group may license the use of its intellectual property including but not limited to its name, likeness, and logo for the use of affiliated offices. Such affiliated offices may not be owned, controlled, managed, supervised or staffed by employees, officers, or agents of Generational Group. Affiliated offices may be independently owned and operated. For more information about a particular office, please contact Generational Group at its office in Dallas, Texas.
This page may contain other proprietary notices and copyright information, the terms of which must be observed and followed.
Information on this web site may contain technical inaccuracies or typographical errors. Information may be changed or updated without notice. Generational Group may also make improvements and/or changes in the products and/or the programs described in this information at any time without notice.
Generational Group does not want to receive confidential or proprietary information from you through our web site. Please note that any information or material sent to Generational Group will be deemed NOT to be confidential. By sending Generational Group any information or material, you grant Generational Group an unrestricted, irrevocable license to use, reproduce, display, perform, modify, transmit and distribute those materials or information, and you also agree that Generational Group is free to use any ideas, concepts, know-how or techniques that you send us for any purpose.
Our computer system protects personal information using advanced firewall technology.
Information Generational Group publishes on the World Wide Web may contain references or cross references to other products, programs and services that are not announced or available in your country. Such references do not imply that Generational Group intends to announce such products, programs or services in your country. Consult a Generational Group representative for information regarding the products, programs and services which may be available to you.
Generational Group makes no representations whatsoever about any other web site which you may access through this one. When you access a non-Generational Group web site, please understand that it is independent from Generational Group, and that Generational Group has no control over the content on that web site. In addition, a link to a non-Generational Group web site does not mean that Generational Group endorses or accepts any responsibility for the content, or the use, of such web site. It is up to you to take precautions to ensure that whatever you select for your use is free of such items as viruses, worms, Trojan horses and other items of a destructive nature.
IN NO EVENT WILL Generational Group BE LIABLE TO ANY PARTY OR ANY DIRECT, INDIRECT, SPECIAL OR OTHER CONSEQUENTIAL DAMAGES FOR ANY USE OF THIS WEBSITE, OR ON ANY OTHER HYPERLINKED WEBSITE, INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR OTHER DATA ON YOUR INFORMATION HANDLING SYSTEM OR OTHERWISE, EVEN IF WE ARE EXPRESSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
Furthermore, all information contained within this website is the property of Generational Group.
Honored to win Investment Banking Firm of the Year 3 years running.
Over 50 awards and counting.
Sign up to receive regular email updates, industry-leading insights and details on complimentary M&A executive conferences in your area from our award-winning team
Success, you have been added to our list.