Some
of the latest research out of one of the nation’s most experienced firms
assisting senior policy owners, Asset Life Settlements, indicates baby boomers
are seeking to cash out and retire more and more in recent years, precisely as
predicted by numerous other analysts. Relative improvements in the near-term
economic outlook, as well as the overall performance health of small
businesses, has driven up the number of aging owners looking to sell their
businesses and one can see a strong correlation here with the Pepperdine
University data from May this year, which found that 65% of all businesses sold
in Q1 were from baby boomers, further reinforcing the validity of this growing
trend. Pepperdine’s survey from last year, showing 67% of business owners
intended to retire in the next decade, is a another leading indicator here and
characterizes accurately the projected roadmap for the roughly 25M or more
small businesses estimated to be sold over the next decade or so as boomers
retire.
The
U.S. small business confidence index rose slightly in August, with business
owners also anticipating improving conditions and subsequently planning
increased CAPEX, according to a related survey by the National Federation of
Independent Business. Pair that up with the fact that boomers control
approximately 70% of the total wealth of the U.S. and represent over half the
nation’s purchasing power, as well as consumer spending, and you get a pretty
accurate picture of what the next decade and a half will look like, especially
when it comes to business turnovers. The fact that boomers represent upwards of
80% of the leisure travel market and generate some 77% of the country’s
financial assets basically says it all, we are going to see one of the greatest
wealth transitions in the history of the entire planet as boomers continue to
retire at the rate of 10k plus a day (Pew Research), shaking up plenty of
acquisition opportunity in what is an approximately $17T pie.
This
is where financial/management holding company LD Holdings, Inc. is targeting
their expansion strategy, emphasizing an ability to provide financial services
to an underserved retiree market and generate considerable returns for their
investors by employing a small cap Berkshire Hathaway (NYSE:BRK-A) roll up
approach. Focusing on acquiring profitable sub-$20M businesses (larger targets
considered, nothing smaller than $2M generally and profitability for 3-5 years
as well as a clear ramping strategy required) and empowered by a $10M secured
credit facility from a qualified institution, the company has already taken
their first major steps towards finishing an initial goal of acquiring three
targets totaling some $16M in sales ($2.3M EBITDA), via an LOI with a certain
Midwest Landscape Maintenance Company. LDHL is also currently still in
negotiations with a handful of (at least four) other companies in this same
vein that could be rolled up, using the initial outdoor Green Sector landscape
maintenance company acquisition as a central platform for growing their
footprint in the $25B plus U.S. lawn maintenance space. The lawn care services
market alone is upwards of $4B a year and it seems safe to assume more and more
consumers will seek out help in this regard as boomer home owners continue to
retire in large numbers.
By
focusing on helping profitable boomer business owners realize exit strategies
amid increasingly tightened long-term, underlying economic conditions, during
what is effectively an up cycle, LDHL looks to build up a strong venture
capital return portfolio without incurring the risks typically associated with
venture capital. This is a strong proposition to investors and with overarching
plans to roll up as many as 50 businesses, consolidating them into cohesive
units, there is a great deal of upside yet to be realized for LDHL. The
eagerness of boomer business owners to get out while the getting is good can be
fairly characterized by soaring interests costs on the $17.7T and growing U.S.
national debt, putting pressures on retirees which are exacerbated further by
rapidly escalating entitlement spending figures, projections on which indicate
that by as early as 2019, $0.90 of every dollar of federal revenue will go to
said entitlements before even one dollar is applied to any other budget item.
To
further the company’s portfolio build out, LDHL has entered a JVA with one of
the biggest and most well organized multimedia marketing companies in the
country, Internet Marketing Consortium, in coordination with their push into
Green Initiative projects. This move gives LDHL access to a sizeable database
of hundreds, or even thousands of quality acquisition targets, simultaneously
bringing the company’s game plan to the fore and increasing exposure via
souped-up marketing strategies that will hit social media and internet radio in
particular with considerable force. President of the Internet Marketing Consortium,
Beryl Wolk, brings over four decades in marketing experience to the table,
having worked with outfits like QVC and the Discovery Channel, and is widely
known as a sort of marketing genius.
LD
Holdings’ core Business Services Division is a serious due diligence engine
with a continually updated database of target companies, to which new prospects
are constantly being added after their circumspect evaluation. This database
also gives LDHL a historical view of different industries, distribution
channels and the evolving geographical advantages or disadvantages related to a
given business/sector, allowing the company to cleverly price their
acquisitions. Moreover, this core business division of LDHL maintains a
sizeable entrepreneur database spanning a range of specific fields and sectors,
an invaluable resource for strategizing acquisitions and acquired targets’
post-acquisition business models, as well as for rigorously vetting new
acquisition candidates. Similarly, LDHL’s Business Services Division maintains
a database of key investors. Investors tagged for possessing a shared vision
and similar objectives, who also are known for their desire to get in at the
ground floor and stick to their guns, holding on for long-term, superior rates
of return.
For
more info on LD Holdings, visit: www.ldholdings.com
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