As a massive wave of baby boomer business owners approaches retirement, the United States is bracing for an unprecedented economic shift. By 2035, roughly 6 million small and medium-size businesses (SMBs) will face ownership transitions, representing up to $5 trillion in enterprise value, according to a new report by the McKinsey Institute for Economic Mobility.
This “Great Ownership Transfer” poses a critical structural test for the U.S. economy. Small businesses account for 99% of all U.S. companies and employ nearly half of the nation’s workforce. However, the report warns that without significant systemic changes, this demographic milestone could result in widespread economic erosion rather than renewal. Today, an alarming 92% of small-business market exits occur through closure, while only 5% are completed as sales, and 3% are transferred to new owners (although the report does not link this percentage to the total $5 trillion valuation).
