While retirement still leads as the number one reason sellers go to market, burnout jumped as a leading reason 27% of sellers went to market. The number of sellers citing health issues (15%) is also higher than previous surveys, suggesting the pandemic has taken a heavy toll on business owners.
In addition, 7% of sellers went to market to get ahead of potential increases in capital gains tax. The Biden administration has indicated it will ask for significant increases in the capital gains tax rate in the near future.
Figure 2: Top Reasons business owners decided to go to market in 2021
I would also add that the inability to secure and retain employees is another substantial reason for business owners to list their businesses for sale. Not that this is a new problem. When the unemployment rate varied between 2.0% and 4.0%, it has always been hard. But 2021 has been different with the 9% unemployment rate and yet few people willing to work. While the issue might be mitigated with the end of the additional federal unemployment “stipend” come September, perhaps not. The Federal Reserve is concerned that a portion of these unemployed are just people who have decided to retire and yet are still choosing to collect unemployment.
Jim Mayfield
Island Business & Commercial Brokerage
jim@islandbusinessbrokers.com
808-240-3020
