Why 90% of Small Businesses for Sale Never Get Bought
Matt reacts to the viral claim that millions of businesses are for sale—but hardly any sell. With 400+ acquisitions under his belt, he cuts through the hype to explain why most businesses stay on the shelf: bad pricing, low income, and zero appeal to real buyers. If you’re dreaming of passive income from buying a business, you might want to hit pause and watch this first.
There are tons of people out on social media giving business advice. Some of it is good advice, but most of it isn’t good. In this series watch CapForge’s owner react to different advice videos. He’s an expert in all things business and has 20+ years of experience under his belt. Some of the things he reacts to might even surprise you!
Video Transcript:
Business Advice Video:
There are about seven million businesses that are publicly listed for sale right now, and only about one in 12 will actually sell this year, and the reason for that is one, most business owners don’t know how to actually value and structure their business for sale. Two, many businesses do not have a built-in mechanism for transition. For instance, their children don’t necessarily want to go into that particular business. And 3rd, they don’t have a built-in mechanism of transition with regard to key employees. They have not built up key employees to a position where they could actually buy the business from the owner. So that means that the vast majority of those businesses then will not be sold.
Matt’s Review:
Most businesses don’t sell because they’re priced wrong, or they’re just not producing enough income to be of any interest to someone who would want to buy it. Any business that makes $100,000 or less is basically a job, right? And there’s not that many people with the money to buy a job who also want that job. Most businesses that you see listed on BizBuySell or things like that, or a lot of them at least, are represented by brokers who do know how to value it, or sort of, at least. But they still don’t sell because they’re just not desirable to buy. Most people, I think these days are not thinking about giving their business to their kids, but if they were, that’s not a business that’s for sale. And I think very few people actually end up selling businesses to their key employees who are not in a position to want to own the business in the 1st place. If they did, generally they’ll leave and start their own rather than buy the one that they currently work at. And it happens sometimes, but most business owners are not looking to groom people to take over the business and buy them out. They’re looking for employees who are not particularly entrepreneurial because they don’t want their employees to decide to leave and go into competition with them. I have a feeling that this is a lot of hype and there’s not probably a ton of value in finding good actual cash flowing businesses because the reality is Having worked in this space for years and years, and having done 400-plus acquisition deals, worked on in just the last four years, I will say that the businesses that are priced right, cash flow well, and ripe for acquisition and scaling, there are way more buyers for those businesses than there are those kinds of businesses for sale. Of the so-so, overpriced, not great, need a lot of work, crappy kind of businesses, Yes, there are a ton of those for sale.But you probably don’t want most of them because they’re gonna take a lot of work to fix up and turn around and get to where they’d be good. Maybe more work in a lot of cases than it would be to just simply start that same kind of business on your own and do it right from the beginning. So the whole idea that there’s tons of businesses out there for sale that anybody can go out and buy and get a bunch of passive cash flow from. Is just a fantasy. It sells classes and courses, and online content, I’m sure, but it’s not the reality.
