Every successful business must be able to answer the question: so what? Why exist at all? What value do you provide to the world that will keep people coming back for more? With technology companies, we’re used to hearing lofty answers to this question: “to reimagine the way the world moves for the better” (Uber); “to organize the world’s information and make it universally accessible and useful” (Google); “[to use] the internet and technology to help consumers find, discover and buy anything” (Amazon)”.
Accessing the American Dream
In addition to these giants, over 32 million small businesses in the United States also have answers to this “so what” question. Maybe they’re the best option for affordable pet services in a growing suburban area. Perhaps they’re the primary way hotel chains in their city launder sheets and towels. Or they are manufacturing experts for a critical part within a complex supply chain. Whatever their reason for existence, small businesses create massive value as job creators, (for almost 50% of US employees), providers of goods and services, and key reference points in their communities. Additionally, successful small business owners create generational wealth for their families. We view this kind of entrepreneurship as an ideal example of the American Dream and this is why we want to push for more diversity in M&A, enabling more people to fulfill the dream.
The Coming Transition and Expanding Diversity
American small businesses are about to enter a time of massive transition. Of the 32 million small businesses in the US, almost 13 million, around 40%, are owned by people over the age of 60. As this generation starts to retire, what will happen to their businesses? The answer to this question will determine the fate of communities built around companies that started in a pre-internet age.
Historically, only 25% of family-owned businesses transition within the family to a future generation. Our economy is at a tipping point, with almost 10 million businesses facing sale or closure.
This pending transition is why Private Market Labs exists. The communities built around past generations of small business owners should not be allowed to die out. Our goal is to support the inter-generational change of millions of small businesses to new ownership. We’ll do this by empowering a broader and more diverse group of entrepreneurs to buy and operate successful small businesses. This is an opportunity to bring lasting wealth to new generations.
Breaking Down Barriers for New SMB Buyers
The current infrastructure around small business M&A is inadequate for the challenge at hand. Buyers face an intimidating 42-step process to purchase a business that can be challenging to navigate. When combined with poorly-designed websites for finding opportunities and a lack of guidance outside the top 20 MBA programs, it’s clear that this industry is due for a shake-up.
We commit to being the agents of this shake up. Each step we take with this company will further the goal of bringing ease and transparency to the M&A process. Ultimately, we want to bring more diversity in M&A with the help of technology.
Thanks for visiting Private Market Labs – we invite you to sign up, follow along on this journey, and send us a note if you have any ideas or feedback to share.
Josh and Titus