If the only people who can buy businesses are individuals, you've cut the potential acquirer pool, and thus the value, by an enormous amount.
> If nobody wants to continue running the independent shop, it doesn't make much difference to consumers if a chain buys it, or if it closes down and the chain just opens a new shop there.
You're pointing out exactly why banning M&A would be good for big businesses. Now instead of having to buy out the little guy, they just wait for it close and then buy all the assets (can assets be sold under this regime? do you just have to throw everything away?) and reopen under their own name. Now the mom and pop lost a bunch of money and the big company got a new location at a big savings.
> Now instead of having to buy out the little guy, they just wait for it close and then buy all the assets
Thiz is a fantasy, these businesses were not going bancrupt - they were challanging big business and making a killing. Your scenario is detached from reality
Why is a buyout even the only option? Just find new management. Keep it in the family. Turn it into a co-op. There’s also such as a thing as community businesses, apparently.
Sometimes people want to exit. They want to retire, move onto a new chapter of their lives and not be involved in the business anymore.
Finding new management doesn't allow that - they can take on the day to day, but you still own the place and are ultimately responsible.
Keeping it in the family isn't an option if you don't have family that want it. If you have multiple family members that want it, you can give it to one and probably cause conflict, or you can have them share management/ownership of it and probably also cause conflict.
Turn it into a co-op? What if the owners have no idea how to do this? What if they don't want to?
Why should people who have created a business not be allowed to sell it and cash out? Why can't they get a payoff for their investment and move on? The solutions you're proposing are all about the community and totally ignore the actual people who spent years of their life getting the business going and probably took meaningful financial risk to do so. Why should we just ignore their desires and tell them what they're allowed to do with their business?
Well, fine. So maybe banning M&As is not the right way. But what is, then? Because the problem is real and severe, and it's also just another case of a more general problem - how to stop the market from creating a class of specialists gaming a single metric?
It's prevalent everywhere you look. As you say, M&As let small business owners retire or move away, without being prisoners of their own business. But the failure mode is companies being built with exit in mind, existing to be flipped - this is doing huge damage to the markets and peoples' lives right now.
Or take housing: it's nice that individuals have a way to sell their house and recover some of the money and effort put into it, when their kids leave the nest, or they retire, or they just want to move to some other location. But the failure mode of this is flipping - people and companies who buy properties, "improve" them to maximize resale value, whether the "improvements" make any sense or not for future tenants, and sell them to various actors. This creates a huge distortion on the real estate market, to the point that housing is now built for flipping, not for living.
(There's also a secondary and equally socially bad effect of owners opposing anything whatsoever that could lead to drop in (growth of) housing prices in their area.)
Or take finance: it's not hard to see the failure modes created by professional finance class, that's busy optimizing money flows in isolation from everything they relate to in the real world.
Or, take corporate management, and the rise of MBA class: specialists in running business as an abstract profit-generating machine, in complete isolation of what the business does and means in the real world.
Etc. etc.
This is the big problem I think we're facing: stopping over-optimization.
> You're pointing out exactly why banning M&A would be good for big businesses. Now instead of having to buy out the little guy, they just wait for it close
Assuming that they close. If it continues to be successful and they can find someone else to run the business when they retire than Big Business never gets a chance to move in. If they don't, Big Business can buy their assets and try to open a new store there just like anyone else could.
Either way, everyone is happy. The owners of the store still retire, and the Big Business gets a chance to outbid everyone else who wants to move into a market that's already proven itself to be a success. That happens enough right now and it's not caused the collapse of society.
> Now the mom and pop lost a bunch of money and the big company got a new location at a big savings.
Why would Big Business acquire the store by paying Mom & Pop more money than M&P would have made letting it close and putting the assets up for sale to the highest bidder? Seems like the smart move for Big Business in that case is to wait it out anyway. If Big Business can convince Mom & Pop to let them be absorbed for less money than Big Business would have had to pay them at auction then M&P still loses money.
> If it continues to be successful and they can find someone else to run the business when they retire than Big Business never gets a chance to move in.
The way you typically do this is by selling the business to someone who wants to continue operating it.
> Either way, everyone is happy. The owners of the store still retire
Owning a business that is managed by somebody else in retirement is not the same as selling the business and retiring. If you still own the business, you are still responsible for it. If you have a great manager and just collect your checks from it, great! But what if that person quits suddenly/dies/etc.? Now you're managing the business again. If the manager of the business needs to work in it (e.g. retail store manager) and you moved away, now you've gotta get back there and start running it again.
Lots of answers in here speaking from very theoretical perspectives with a clear lack of understanding of the actual day-to-day reality of what owning a small business looks like.
> Now the mom and pop lost a bunch of money and the big company got a new location at a big savings.
Why did the big company save money this way? If it's cheaper for them to just wait for bankruptcy, why don't they just always do that?
It seems the only answer is that they are counting on continuing the popular "brand" of the independent store. But that brand is exactly tied up to this store not being part of the big chain, so continuing it would be pure deceit.
Or as ClumsyPilot says, the business wasn't going bankrupt at all. Bit chain just wanted it, and now they can't.
> If nobody wants to continue running the independent shop, it doesn't make much difference to consumers if a chain buys it, or if it closes down and the chain just opens a new shop there.
You're pointing out exactly why banning M&A would be good for big businesses. Now instead of having to buy out the little guy, they just wait for it close and then buy all the assets (can assets be sold under this regime? do you just have to throw everything away?) and reopen under their own name. Now the mom and pop lost a bunch of money and the big company got a new location at a big savings.