The much-spoken-about “great wealth transfer” isn’t just a future event; it’s already underway. 

Driving this are Baby Boomers. Most of them are set to retire, and they own roughly 40% of all US small businesses, which are estimated to be worth around $10 trillion. 

As you can imagine, they don’t just want to close down their businesses. They want someone to carry on their legacy, exit with some healthy retirement cash, and so forth. 

That’s why mergers and acquisitions (M&A) will be a key driver in this massive wealth transfer. 

What’s Driving the Shift? 

 

 

First off, Baby Boomers (born between 1946 and 1964) are between 60 and 80 years old. If they haven’t already retired, they’re set to retire soon. In fact, 4 million Americans will reach age 65 each year through the mid-2020s. 

Second, many of these owners lack a family successor or plan to keep the business in-house. Surveys even show that over half of Boomer small-business owners have no formal succession plan, so selling to outside buyers has become a primary exit option. 

Finally, timing. A lot of buyers have been delaying retiring or selling after the 2008 financial crisis and again during the COVID-19 uncertainty. Therefore, there’s a huge backlog of business owners putting their businesses on the market. 

Why Baby Boomers Are Selling Their Businesses

Nearly 43% of Boomer businesses cite “retirement” as their main reason for selling. Others are motivated by fatigue and life balance. 

Notably, many sellers are intentional about how they exit, not just when. After 30+ years of business, they don’t want “anybody” to take over. 

Instead, they are seeking businesses that will keep their business and name thriving, treat their long-time employees well, and so forth. 

How Baby Boomer Retirements Are Driving Small Business M&A

This massive wave of retirements is translating into a boom in small business mergers and acquisitions (M&A). 

Essentially, thousands of Main Street and lower middle companies are being put up for sale, and buyers are taking notice. In 2024 alone, sales of such businesses rose by 5%. 

These are distressed startups changing hands, either. They’re established businesses. Around 78% of all Bommer-owned businesses are profitable, which is much higher when compared to startups. 

Because of this, experts believe that around 70% of Bommer-owned businesses (which is roughly 7 million) will change ownership in the next 10 to 15 years. 

What This Means for Buyers and Sellers

For buyers, this presents a rare buyer’s market for small businesses. You now have access to a larger supply of stable, established businesses to purchase. 

On the other hand, for sellers, it’s an opportunity to find buyers who will carry on their legacy and somewhat fund their long-awaited retirement. 

Why Seller Financing Is Common in Baby Boomer Exits

One massive benefit to Bommers’ business sales is the frequent use of seller financing (also known as owner financing). 

In such agreements, the seller agrees to loan the buyer a portion of the purchase price, allowing the buyer to pay over time instead of upfront for the business. 

As a result, M&A for these businesses is just for large corporations. They’re also for individuals, entrepreneurs, and startups looking to enter markets. 

Conclusion 

The Baby Boomer generational wealth transfer in the small-business area is happening now and will continue to unfold over multiple years. 

Thousands upon thousands of businesses will change in ownership, and many of them will include seller financing. 

If you’re thinking of buying, selling, or transitioning a business in this environment, it’s a good idea to get some guidance. That’s why we recommend contacting us at OCX Advisors, your specialists for navigating this generational shift.