David Barnett - Business and Asset Values: Why Most Small Businesses Never Sell

BIO: As an author, consultant, and international speaker, David C. Barnett has helped thousands of entrepreneurs avoid bad deals and close successful ones.

STORY: Seven years after his first appearance discussing tax-related business losses, David returns for his third visit to unpack the biggest myth in small business acquisitions: that a wave of retiring baby boomers is about to flood the market with cheap businesses for sale. The real numbers tell a very different story, and most of what actually kills a deal has nothing to do with supply and demand.

LEARNING: Value is never a fixed number; it depends entirely on who is asking and why.

"Success is not closing the deal. It is buying a successful cash-flowing business at a reasonable price that's going to allow you to get a reasonable rate of return—or you avoid a bad deal."David Barnett

As an author, consultant, and international speaker, David C. Barnett has helped thousands of entrepreneurs avoid bad deals and achieve successful business deals. His YouTube channel and podcast reach a global audience of small business buyers and sellers.

David joins the podcast for a third time to discuss his newly released book, Business and Asset Values, and the realities of buying and selling small and mid-sized businesses today.

The "silver tsunami" myth, debunkedThere is a lot of buzz right now about a coming wave of business sales, driven by baby boomer owners hitting retirement age. David has heard the pitch many times, and he does not buy it. The theory goes that this surplus of retiring owners will flood the market and drive prices down. But supply and demand only work that way if the pool of buyers stays fixed, and in small business, it does not.

David uses his own 17-foot aluminum canoe to make the point: he already owns one, so no price will convince him to buy a second. Most consumer goods work that way. Small business acquisitions do not.

Successful buyers that already own profitable businesses have no limit to how many other new businesses they can also acquire. And so the competitive forces at play when a good private business comes up for sale are just as vigorous as they always have been. The businesses that struggle to sell were always going to struggle, tsunami or not. BizBuySell, one of the largest business-for-sale marketplaces, reports that roughly 70% of listed businesses never sell.

Why most listed businesses never sellAccording to David, most listed businesses never sell due to dead capital.