The effort and cost to track and forecast our economy probably rivals the GNP of small nations.  Elections often hinge on the voter’s perception of the economy, hence catchy sayings, “It’s the economy, stupid,” and “Are you better off now than you were four years ago?”

Yet, most people ignore it unless it gets personal. And it gets personal when our jobs are on the line. In 1998 and 1999, according to the Wall Street Journal (March 13, 2000), over 675,000 middle managers lost their jobs (each year). Most of them found replacement jobs, but it seems is becoming harder to do as companies tighten their belt to cope with higher interest costs and rising wages.

True entrepreneurs are creators; they start companies. Corporate people tend to make good managers; they buy companies. Corporate refugees fuel the buy-sell market for family owned businesses.

There are four types of people, when it comes to business ownership. Some will never do it. Some will do nothing else. In the middle are those who either stumble into it or are forced into it (or maybe a combination). Often it’s a merger or a downsizing that triggers the executive to take action and say “No more corporate life. It’s time to take control of my own destiny.”

Being managers, the ideal match is a company that the entrepreneur took as far as he or she can. The company needs systems, processes and structure. Exactly what the corporate refugee can provide.

Fair deals happen faster, if the buyer is lucky, because the seller has experienced one of the three D’s (divorce, death or disability) or any other distressing personal event.

 A seller wants to sell when the business is on top and a buyer wants to buy when events force the seller to sell. Often, the economy is the trigger. The combination of buyers on the employment cusp and sellers fearful of tough times are the situation to get more deals done.

The bottom line:

1. The timing is right as the greatest transfer of wealth in history will occur in this country over the next decade; an estimated $10 trillion is expected to change hands, and much of this wealth is tied up in family-businesses (Wall Street Journal, June 19, 1996).

2. Corporate downsizing pushes out employees at all levels. The cooling economy will make the job search tougher (according to the Wall Street Journal, December 7, 1999, it takes 33% longer to find a new position than it did a year earlier).

3. Management buy-outs increase when more owners decide to retire and realize they have an excellent in-house transition opportunity.

4. Some sellers leverage their proceeds by buying a larger company.

5. Experts predict a huge wealth transfer, much of it family-owned businesses. Since only 20% of business owners believe their companies will stay in the family (The Family Firm Institute, June 2000), there is a tremendous potential for buyers.

The upcoming years should see more transactions in the family-owned business market (especially in the size range above the “Mom and Pop” level)