The U.S. stands on the brink of an unprecedented wave of small-business ownership transitions as millions of baby boomers retire — creating both economic risk and a rare opportunity for wealth building across communities, according to a new report from the McKinsey Institute for Economic Mobility.
By 2035, about 6 million small and medium-sized businesses will face ownership transitions as their owners retire, the report found.
More than 1 million of these firms are viable candidates for sale, representing up to $5 trillion in enterprise value that could either fuel economic renewal or evaporate through business closures.
Small businesses employ more than 60 million workers and generate 35% of business revenue. When these businesses disappear, so do pathways to economic mobility for workers and communities, the report explained.
Uneven geographic impact
Rural areas face disproportionate risk from the coming wave of transitions.
In some sparsely populated states, small businesses account for more than half of total employment, meaning failed successions could stall economic mobility across entire communities.
In states such as Maine, Montana, Vermont and Wyoming, the value of small businesses at risk represents as much as 3.2% of economic output, according to the analysis.
These regions combine older business ownership profiles with the thinnest ecosystems for replacing departing business owners.
Demographic gaps, wealth-building potential
Under current patterns, only about 28% of potential business value transfers would accrue to women and Black and Latino individuals combined.
Closing the participation gaps could unlock up to $3 trillion in new household wealth, making business ownership transfers one of the most powerful near-term levers to narrow disparities in wealth accumulation.
“This moment is not merely a generational milestone — it is a structural test of the nation’s capacity to preserve local employment, sustain productive businesses, and support economic mobility,” the report stated.
Blacks are estimated to capture roughly $87 billion of transferring enterprise value under current dynamics. Achieving parity in ownership participation could increase that figure more than fourfold to approximately $369 billion.
Women account for only about 23% of business owners today. Reaching parity could unlock approximately $700 billion in wealth capture, the analysis found.
Barriers to transition
Despite the economic value embedded in many small businesses, closure — rather than continuity — remains the dominant option today.
In 2022, an estimated 510,000 small and medium-sized businesses exited the market, with 92% occurring through closure.
Only 5% were completed as sales and 3% transferred to new owners, often family members.
“Most owners don’t really understand their exit options,” one leader of an organization focused on helping business owners prepare for transition told McKinsey researchers. “Their wealth is tied up in the business, but they haven’t thought about what comes next or how it’s supposed to support the rest of their lives.”
The report identifies fragmented systems as a primary obstacle.
Data shows buyers and sellers struggle to find each other, financing remains difficult to access and advisory capacity serves only the upper end of the market.
Unlike the startup ecosystem — with its incubators, accelerators and technical assistance — acquisitions remain largely invisible and unsupported, according to the report.
Senior housing wealth, retirement savings
In addition to potential transfers of business ownership, a monumental share of housing wealth also stands to change hands in the coming years.
Home equity among U.S. homeowners ages 62 and older rose to a record $14.66 trillion in the third quarter of 2025, driven by rising home values and continued equity accumulation, according to the National Reverse Mortgage Lenders Association (NRMLA).
NRMLA’s Reverse Mortgage Market Index climbed to a reading of 511.99 — up from 502.47 in the prior quarter and the highest level since the index launched in 2000.
An estimated 2% increase in home values added about $295.4 billion in senior housing equity during the quarter, partially offset by a roughly 1% rise in mortgage debt.
Americans are also living longer than ever — a positive trend that can complicate retirement planning. U.S. residents born in 2024 have an average life expectancy of 79, an increase of more than six months from 2023, data from the National Center for Health Statistics shows.
A 65-year-old man today can expect to live to 84, while a 65-year-old woman can expect to live until 86.
Yet longevity literacy remains poor. A 2025 TIAA Institute survey found only 32% of adults correctly estimated the life expectancy of a 65-year-old.
The disconnect affects savings behavior. Among those who expect to live less than 10 years after retirement, 50% save regularly. But 70% who expect a 20-year retirement save regularly, the survey found.
Opportunity for economic renewal
Effective business ownership transitions could keep up to 12 million jobs in place and protect about $250 billion per year in local spending power, according to McKinsey.
“The Great Ownership Transfer is not merely a transition agenda: It is a renewal agenda,” the report stated. “It offers the opportunity to replace a fragile, exclusionary system with one that regenerates local businesses under new leadership, investment, and ideas.”
The report calls for coordinated action among banks, corporate buyers, intermediaries, public agencies and educational institutions to build infrastructure for ownership transfers at scale.
“Within a decade, buying a business could be as common, visible, and supported as starting one,” the report said. “New and diverse owners would build on the legacies of retiring entrepreneurs, sustaining jobs while innovating for the future.”
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