The world has watched in shock and disbelief as the UK voted to leave the European Union and then America elected maverick businessman Donald Trump as their next president.
Commentators have quickly pointed to common factors underlying these two momentous events. In particular, the decimation of manufacturing industries, factory closures, job losses, the disintegration of many communities and flow on concerns about immigration and security.
These factors haven't just suddenly appeared. To understand them properly we need to turn the clock back a few decades.
After World War 2, most Western economies experienced periods of sustained growth and prosperity. Business boomed, often sheltered behind protective trade barriers, and the average person's standard of living rose rapidly.
Over recent decades, these economic advantages have been progressively eroded in Western economies due to globalisation, free trade, information technology, the internet and, more recently, industry disruption and automation. Developing economies, particularly in Asia, have been the primary beneficiaries.
At the end of the day, the votes in both the UK and US were pretty straight forward.
The establishment, youth and minority groups generally voted for maintaining the status quo. And the disillusioned and disenfranchised working and middle classes in the UK north and across most of the US voted for a radically new way.
In the UK they voted to lift the yoke of Euro-bureaucracy and free the UK to once again pursue its historical place as one of the world's great nations. In the US they punted on a maverick can-do businessman who has promised to "make America great again".
We would be kidding ourselves if we didn't think these issues were also at play in the last Australian federal election. The difference here was voters had no clear alternative, so many just reluctantly voted for one of the major parties, or in record numbers for alternative parties and independents.
So what have business exits got to do with this? Quite a lot actually, because there's another huge wave of change starting to hit the private business market place that's not yet on anyone's radar screen, particularly governments.
Over the next 20 or 30 years we will see a massive transfer of wealth from baby boomers to the next generation. Many are describing it as they greatest wealth transfer in history and, with one key exception, it will probably occur in a fairly orderly way.
Baby boomers also own the vast majority of private businesses, up to 80% in developed economies. The transition of private businesses owned by baby boomers to new owners is likely to be far more challenging than the transfer of their general wealth to the next generation.
According to recent data on the US market from the Exit Planning Institute:
*76% of business owners (mostly baby boomers) plan to transition their business over the next 10 years (representing 4.5 million US businesses and over US$10 trillion in business value);
*49% of business owners have no transition plan; and
*70% of businesses put on the market don't sell.
The position is similar in Australia and most other Western economies.
This developing scenario has been described by some commentators as a "baby boomer business exit tsunami". Exactly how it will play out in practice is difficult to tell, but I believe it's just as important as developing issues like industry disruption and automation.
I have previously posted about the "baby boomer business exit tsunami", it's potential flow on implications and the Australian government's lack of focus on the issue. The biggest risk is that a lot of baby boomer businesses don't transition, resulting in substantial job losses and some industry sectors becoming significantly weakened or even unviable. You can read my previous post here.
The recent votes in the UK and the US emphasise the importance the average Brit and American puts on fundamental things like the opportunity to earn a living, support their families and pursue their dreams. I'm sure we can add Aussies to that list.
In most developed economies like Australia, at least half the work force relies upon private business owners to provide them with jobs so they can pursue these objectives.
Donald Trump, Theresa May and Malcolm Turnbull have massive tasks ahead of them to provide a robust framework for their private business sectors to endure and flourish. This will involve navigating difficult issues on free trade arrangements, industry disruption and automation. They need to add the "baby boomer business exit tsunami" issue to their list.
By: Geoff Green (Melbourne, Austraila), a well
known business exit strategist, entrepreneur and corporate lawyer. He is also the author of The Smart Business Exit, Getting Rewarded for your Blood, Sweat and Tears