The Silver Tsunami Meets a Capital Squeeze

How owners in their 60s can decide, without romance or panic, whether to sell now or invest and sell later.

Anne (not her real name, to protect her employees) faces a familiar choice. She is 63, runs a tidy fabrication shop that does CNC machining and precision lathing, employs 14 people, and earns about $2 million in EBITDA. Private equity buyers have called many times. The choice appears simple: take the check and exhale, or keep operating and revisit a sale in a few years. There is no formal succession plan, and reporting still revolves around the owner. Anne’s aim is ordinary and admirable: do what is best for her family, her employees, and her customers.

The backdrop argues for discipline rather than drama. According to the U.S. Census Bureau, more than half of business owners are 55 or older, which means a lot of succession decisions are coming. At the same time, PitchBook and McKinsey describe a K-shaped private equity climate, where the largest funds continue to attract an outsized share of commitments while smaller deals face choosier capital. Translation: larger, more professionally-run companies are seeing attractive deals while smaller, owner-operated businesses are seeing fewer and riskier deals.

So how does an owner decide? Treat it as a capital allocation problem. Put two paths on the same footing:

• Sell-now path: after-tax cash at close, plus the expected value of any rollover. (Earn-outs may be off-limits if the deal relies on SBA debt.)

• Invest-then-sell path: after-tax exit proceeds on higher EBITDA and, if earned, a better multiple, minus owner out-of-pocket capex after tax shields and realistic financing, plus the present value of operating cash while you hold the business. Then probability-weight the plan and apply an owner-specific risk haircut.

That last term, cash while you wait, is often ignored. It should not be. On a $2 million EBITDA base with sensible cash conversion, it is not pocket change.

Policy also matters. The current toolkit leans toward investing in manufacturing at home, even if trade policy keeps everyone on their toes.

Advantages that favor staying and strengthening

• Accelerated expensing for equipment. The latest tax rules restore 100% bonus depreciation for qualifying property. There is also a new elective 100% allowance for certain production assets. In plain English, a CNC lathe or automation cell with a real payback can be expensed up front, which improves after-tax returns and shortens breakeven. Policymakers are using the tax code to encourage domestic production, and owners can use that nudge to fund practical upgrades.

• SBA programs with higher-impact options. Standard 7(a) and 504 loans remain the backbone for smaller companies, and the new MARC revolving-credit channel is designed to broaden working capital for manufacturers. None of this replaces bankability, but it can lower the owner’s cash flow risk and smooth the path when paired with modest leverage and credible paybacks.

• Repatriation intent, practical effect. Taken together, full expensing and manufacturer-focused credit are a signal. Washington wants more production at home, and it is trying to make domestic capex cheaper and financing more available.

The offset: tariff and policy uncertainty

Tariffs and related documentation rules have moved more than once in recent years. Metal-heavy shops felt that quickly in landed costs and lead times of raw materials. The practical response is not fatalism, it is resilience planning. Assume more noise in input prices and delivery schedules, and stress-test your plan for cash flow risks with professional treasury management.

What actually improves outcomes on the 'stay' path

• Resilience in structure. Reduce key-person dependence, diversify top-customer exposure, and update a simple monthly reporting pack that includes a P&L, a cash bridge, a trailing twelve month view, orders, backlog, on-time delivery, and scrap or rework. Add one capable manager under the owner. Buyers pay for Resilience, not personality.

• Resilience in earnings. Invest where cash conversion improves. For a shop like Anne’s, that usually means quick-change tooling, program standardization, removing the bottleneck cell, and tightening pricing and procurement. Vanity capex is banned. Every material dollar should show up in unit economics or in demonstrable, sellable capacity.

• Resilience in financing. Use accelerated expensing and appropriate SBA, USDA, or conventional mixes to lower the equity check without over-gearing. Share a detailed business plan with your lender that covers use of funds, paybacks, KPIs, and the monthly reporting pack. Treat the first quarter as a proof-of-execution window.

There remain honest reasons to sell now. If the odds of executing a short list of improvements are low, for example a thin bench, concentrated revenue, or volatile demand, or if personal constraints loom, for example health, energy, or appetite for another cycle, certainty is valuable. A sale with rollover can be a pragmatic middle path, but remember that you are underwriting someone else’s execution and timeline.

Back to Anne. We ran her numbers two ways. Sell now, and she likely nets about $5 million after tax. That estimate assumes typical lower-middle-market multiples for owner-dependent shops and a blended capital-gains rate that varies by state. Invest, then sell, and the picture shifts. One senior hire, two process upgrades with measured paybacks, a modest tuck-in to smooth customer concentration, and disciplined pricing could plausibly lift EBITDA by a quarter to a third over four years. With accelerated expensing on qualifying capex and steady operating cash along the way, our estimate for a four-year exit is nearly $10 million after tax, nearly doubling the economic value created for Anne. These are estimates, not promises. Execution and cycles matter.

Three rules keep the exercise honest:

1. Stress-test conservative, base, and ambitious cases. If it only works in ambitious, it does not work.

2. Bring in the banker early, not late. Show paybacks and the monthly pack.

3. Plan at the household level. Liquidity timing, taxes, estate planning, and portfolio risk need to fit together. A qualified wealth advisor should sit at the table before numbers harden.

Where does that leave owners? In a selective market, Resilience is the product. The decision is not whether to retire or grind, it is whether value can be created, reliably, before you sell. If yes, build Resilience and harvest cash. If not, price for certainty and move on.

Originally published on LinkedIn. Updated and republished here with additional insights.

When Growth Demands Its Price

Growth is Faustian. It tempts firms with promises of wealth and power while concealing the risks that can undo them. Built on strength, it compounds resilience into cash, credibility and value. Built on weakness, it accelerates fragility into cash strain, chaos and mistrust.

Every owner wants growth. Bankers cheer it. Economists measure it. Yet growth is not salvation. It is an amplifier. It multiplies what already lies inside a business, exposing cracks as quickly as it rewards discipline. The question is not whether to grow, but whether the business can withstand what growth will amplify.

Growth pains

When liquidity is thin, growth tightens the squeeze. More orders mean more receivables, more inventory and less cash. This is overtrading: expanding faster than working capital can bear.

When discipline is weak, growth magnifies the chaos. “A few late shipments today are not going to improve if we double the volume,” warns Bill W., a warehouse manager. At ten million dollars in revenue, delays are irritants. At fifteen million, they are reputational damage. Reliability does not scale by itself.

When credibility is missing, growth breeds mistrust. “We are asked for larger facilities, but the cash flows can’t support it,” says a commercial banker. Customers share the concern, hesitating to place bigger orders with suppliers who fumble the basics. Hustle may carry a firm through its early years. But it does not scale. Without resilience—systems, discipline and focus—growth turns hustle into a liability.

Strength training

If liquidity is secure, growth generates cash. Fixed costs spread wider, operating leverage takes hold and incremental sales deliver more profit.

If reliability is high, growth deepens trust. Orders arrive on time. Quality is consistent. Reputation compounds. One satisfied customer becomes a stream of repeat and referral business.

Professional management builds credible growth. Transparent reporting and deeper teams reduce risk. “Once the numbers were clear and the team was deeper, we were comfortable lending more at better terms,” notes another banker. Growth not only expands earnings, it lowers the cost of capital and lifts valuations.

Fault lines under pressure

The Resilience Hierarchy, modelled on Maslow’s pyramid, sets out the sequence. At the base the constraint is liquidity. Then come control, reliability, professionalism, scale, innovation and, at the summit, legacy. Growth will amplify whichever constraint is unresolved. Liquidity gaps become cash crises. Weak governance becomes founder dependence. But once the constraint is solved, growth amplifies strength instead.

This is not a tale of good growth and bad growth. Growth is always growth. Its effect depends on the foundations beneath it.

Proof in the margins

Take a ten-million-dollar contract manufacturer. At first, more orders meant more late deliveries, more angry customers and less clarity on profitability. Expansion multiplied weakness. The firm then fixed reliability and professionalism. On-time delivery rose above ninety percent. Product-line profitability became clear.

When growth returned, it multiplied strength instead. Margins improved. Cash flow doubled. Bankers offered cheaper credit. “It finally felt like the business was working for us, not the other way around,” recalls the owner. Within four years EBITDA rose from one million to 2.3 million. Enterprise value climbed from 5.5 million to 13.8 million. Growth became a reward for resilience rather than a punishment for fragility.

Take one down, pass it around

The BluGrowth formula is simple: find the constraint, remove the constraint, repeat. Each time a bottleneck falls, another appears. Take one down, pass it around. Progress is steady, compounding, and focused. This rhythm turns growth from a source of anxiety into a source of wealth.

Growth is not a strategy. It is a force multiplier. Owners must ask what weaknesses growth will expose. Bankers must ask what strengths it will magnify. Investors must ask whether the returns justify the risks that growth will amplify.