The Boring Boomer Business Buyout
Buy a retiring owner's declining business with no money down, seller-financed against the business itself
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 94%
Priestley calls this one of the two biggest opportunities in the world right now. Baby boomers own 65% of all business equity in the economy, and a typical case is a late-60s owner whose business peaked at a couple of million, has drifted down to high six figures as they semi-retire, and is now almost unsaleable because it's in decline. They want to hand over the keys to someone fresh. So you propose a vendor-financed exit: you agree the valuation, pay it out over six or seven years, make them chairperson of the board, and secure the loan against the business itself — if you miss payments they take it back with everything you've added. Then you bring fresh energy: digitise the operation, re-engage the team, talk to customers, build a bit of brand. Meanwhile every young person is chasing the latest psychedelic startup and ignoring the elevator repair business doing £8 million a year.
Origin
Priestley has done deals like this himself, points to Cody Sanchez's work on the same thesis, and notes his friend Jeremy — owner of the Dubai yacht — built his wealth this way.
Core principles
- 0165% of all business equity is owned by baby boomers who must pass it on somewhere.
- 02Money is just a database of value — the seller is the most likely financier.
- 03The arbitrage is in boring businesses everyone else is too vain to want.
- 04Secure the purchase with the business itself so the seller's downside is recoverable.
- 05The deal only works if they believe in your ability to execute — and there's no better offer.
How to run it
- 1
Find the retiring owner of a declining business
Look for a late-60s or early-70s owner whose business has fallen from its high-water mark, is nearly unsaleable, and who simply wants to hand over the keys.
Pro tip A marketing agency doing £2M against a £4M high-water mark, with a core team, a 20-year reputation and live contracts, is a far better starting point than a blank sheet of paper.
- 2
Agree the valuation openly
Concede the business is worth what it's worth — say £1.2 million — and be explicit that you don't have £1.2 million.
- 3
Propose seller financing over six or seven years
Offer to pay the full price in instalments — say £120,000 a year for seven years — funded by the business's own trading.
Pro tip Reason from the seller's side: they want the south of France and the grandkids, and nobody else is offering anything.
- 4
Secure the loan against the business
Make the business itself the security, so if you miss payments they take it back including everything you've invested and built.
Pro tip Give them a board seat or chairperson role so they retain visibility and comfort.
Watch out This only closes if they believe in your ability to execute — the business plan has to make the payments plausibly serviceable.
- 5
Bring the fresh energy in
Digitise the operations, re-engage the team with meetings and a vision, go and talk to customers again, host events, send messages and build some brand.
Pro tip Making a boring business exciting can mean an associated charity, or hiring young people coming out of prison and giving them a second chance.
In the wild
Priestley's friend Kit King took over a business from a retiring owner where orders were printed and stuck on a spike, then a second spike for fulfilled. He spent about £25,000 on a specialist to digitise and automate order flow, and re-engaged a dozen totally disengaged staff who hadn't had a team meeting or spoken to customers in ages.
→ The 30-year-old business grew around 500% in about two years, on a no-money-down deal.
Priestley's client Sebastian Bates runs a highly profitable martial arts school in the UK and Dubai and used it to fund martial arts academies in Kenya and Nepal for street and homeless kids.
→ A demonstration that a business can do a boring thing and still be an exciting business through how it's run.
Bartlett reflects that instead of pitching a brand new tech company because he'd seen The Social Network, he could have approached a declining £2M agency with a 20-year reputation and contracts with AWS and HarperCollins.
→ He'd have started Social Chain on top of a couple of million in revenue rather than from absolute scratch.
Common mistakes
Chasing the psychedelic startup instead
Young people won't touch the elevator repair business doing £8 million a year, which is precisely why the arbitrage exists.
Assuming you need a bank
A bank probably won't lend against it, but the person selling it is the most likely party to see the value and fund the transfer.
Is it for you?
Best for
Operators with sales and deal-structuring ability but little capital, who'd rather improve something real than invent one.
Not ideal for
Founders whose whole motivation is inventing something new from a blank page.
From the transcript
“65% of the value of all business equity in the economy is owned by baby boomers right now”
“The arbitrage in the opportunity here is boring businesses.”
“So you're securing the purchase of the business with the business itself.”
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