6M Small Business Owners to Reach Retirement by 2035

New research from the McKinsey Institute for Economic Mobility shows that by 2035, about six million U.S. small and medium-sized business owners will reach retirement. This figure represents over one million businesses that could be sold, totaling up to US$5 trillion in enterprise value.

Yet if current trends continue, 92% of these small businesses—defined as firms with less than $5 million in enterprise value—will close rather than be sold. Most lack the scale to attract institutional buyers, but their complexity makes informal handoffs difficult. Private equity firms and strategic acquirers typically pursue higher-value deals above the $5 million threshold, which excludes most micro- and middle-market firms, McKinsey reported.

With too few prepared buyers to take these businesses forward, McKinsey said closing that gap means building scalable ownership bridges, especially for communities long underrepresented among business owners. Currently, just 28% of the $5 trillion in enterprise value projected to transfer in the next decade—approximately $1.4 trillion—would go to women and Black and Latino people combined. Closing these participation gaps could potentially generate up to $3 trillion in new household wealth, making ownership transfers a significant near-term lever to address wealth disparities by geography, gender, and race.

McKinsey research finds that ownership transitions during the next decade could preserve up to 12 million jobs. Preserving them depends less on investing new capital and more on modernizing how buyers, sellers, and lenders connect so small-business succession can work at scale.

Of all U.S. companies, 99% are small businesses. They collectively employ over 60 million people—representing nearly half of the U.S. workforce—and account for 35% of total business revenue. Failed business transitions risk the loss of millions of jobs and the erosion of locally rooted opportunities for economic mobility.