A massive shift in business ownership is already underway in the United States. As millions of baby boomer entrepreneurs approach retirement, the country faces what McKinsey calls āThe Great Ownership Transfer.ā This wave of succession will shape the future of small businesses, local economies, and wealth creation for decades to come.
According to a recent report from the McKinsey Institute for Economic Mobility, roughly six million small and medium-sized businesses will face ownership transitions by 2035, representing as much as $5 trillion in enterprise value.
The question is no longer whether this transition will happen.
The real question is how it will happenāand who will benefit from it.
Why the Ownership Transition Matters
Small businesses are the backbone of the U.S. economy. They represent 99% of all companies, employ more than 60 million workers, and generate 35% of business revenue nationwide.
When these businesses fail to transition successfully, the consequences go far beyond a single ownerās retirement. Failed transitions can mean:
Lost jobs
Reduced local investment
Weakened community economies
Lost pathways to wealth creation
Today, most business exits still occur through closure rather than transfer. McKinsey estimates that in 2022 alone, 92% of small business exits resulted in closure, while only a small fraction were sold or transferred to new owners.
In many cases, these closures are not due to failing businessesābut rather a lack of succession planning, financing, or accessible buyers.
A Once-in-a-Generation Opportunity
While the risks are real, the coming transition also presents an extraordinary opportunity.
If even a portion of these businesses successfully transition to new ownership rather than shutting down, the economic impact could be enormous. McKinsey estimates that effective ownership transitions could:
Preserve up to 12 million jobs
Protect approximately $250 billion in annual local spending power
Perhaps most importantly, expanding access to business ownership could significantly reduce wealth gaps. Under current patterns, only about 28% of transferring business value would accrue to women and Black or Latino individuals combined, but broader participation could unlock up to $3 trillion in new household wealth.
This makes ownership transition one of the most powerful near-term tools for expanding economic mobility in the United States.
Why So Many Business Transitions Fail
Despite the scale of the opportunity, the current market for small-business transitions remains fragmented.
Many owners delay succession planning until late in their careers. Others lack access to qualified buyers or financing options. In addition, the infrastructure supporting ownership transfersāadvisors, financing structures, and transition planningāis still underdeveloped.
As a result, viable businesses often close simply because there is no clear pathway for transfer.
The Role of Structured Ownership Transitions
To capture the full value of the coming ownership wave, the U.S. will need more effective transition structures that allow owners to exit while preserving businesses and jobs.
One increasingly important solution is employee ownership, including Employee Stock Ownership Plans (ESOPs). ESOPs can provide:
A structured succession path for retiring owners
Liquidity and potential tax advantages for sellers
Long-term continuity for the business
Wealth-building opportunities for employees
When implemented correctly, employee ownership allows the next generation of stakeholdersāthe employees themselvesāto carry forward the companyās legacy.
Preparing for the Ownership Transition Wave
For business owners approaching retirement, the next decade will bring both urgency and opportunity. Planning early is essential to ensure that a lifetime of work results in a successful transition rather than an unnecessary closure.
Key steps include:
Evaluating succession options early
Understanding the value of the business
Exploring tax-efficient exit strategies
Considering employee ownership and other structured transitions
Owners who start planning well before retirement are far more likely to achieve a successful transition that protects their employees, their communities, and their legacy.
The Bottom Line
The Great Ownership Transfer is not just a demographic trendāit is a defining economic shift.
Handled poorly, it could lead to widespread small-business closures and lost economic opportunity. Handled well, it could preserve millions of jobs, strengthen communities, and expand access to ownership across the country.
The difference will depend on whether owners, advisors, and policymakers build the systems needed to transfer businessesānot just close them.
Planning Your Ownership Transition
For many business owners, succession planning is one of the most importantāand most delayedādecisions they will ever make. With millions of businesses expected to transition in the next decade, early planning can mean the difference between preserving a companyās legacy and seeing it disappear.
Employee Stock Ownership Plans (ESOPs) are one of several strategies that can help owners achieve liquidity while maintaining business continuity and rewarding the employees who helped build the company.
If youāre a business owner considering your exit optionsāor an advisor helping clients navigate successionānow is the time to start exploring the available pathways.
Contact our team to learn how structured ownership transitions, including ESOPs, can help preserve businesses, protect jobs, and create long-term value for owners and employees alike.
Source: McKinsey Institute for Economic Mobility,
āThe Great Ownership Transfer: A new era of business stewardshipā (Feb. 26, 2026).
Phil DeDominicisĀ is an ESOP strategist and M&A advisor who has guided 300+ companies through ESOP formations, financing, and transactions overĀ 20+ years at Menke & Associates. He specializes inĀ selling ESOPāowned businessesĀ to financial or strategic buyers and inĀ helping ESOP companies acquire other businesses.
