TL;DR: According to Gallup's 2025 Pathways to Wealth Survey, 52.3% of U.S. employer-businesses are owned by people 55 or older — roughly 3 million companies. Most want to sell. Most aren't ready. That gap is the defining business opportunity of the next decade.
Three million business owners. Average age heading toward 68. Thirty-two million employees working at companies whose owners have no formal exit plan.
This is small business succession planning at scale. It is not a niche topic. It is a structural shift in the American economy, and it is happening right now.
The numbers are not complicated. They are just large enough that most people look past them.
The Scale of What's Coming
The Olin-Brookings Commission's 2024 report, Main Street's Tidal Wave of Transition, puts the total value of businesses facing ownership transfer at $100 trillion in small and medium-sized enterprises. Not all of those will sell to private buyers. Many will close. Many will transfer to family. But a substantial portion will enter the market looking for qualified acquirers.
Gallup's data is specific: 74% of employer-owned businesses (those with actual employees on payroll) plan to sell or transfer ownership as their owners approach retirement. That is not a fringe group. That is most of the 3 million employer-businesses with boomer owners.
The SBA counts roughly 6 million private-sector employer firms in the United States. Half of them are owned by people 55 or older. The average boomer owner is now 67. Ernst and Young has found that most family business owners begin thinking seriously about succession at age 63. The thinking is already overdue.
The Preparation Gap
Wanting to sell and being ready to sell are different things. That gap is where most businesses lose value.
The 2023 National State of Owner Readiness Survey found that 77% of baby boomer business owners want to exit within 10 years. Fifty-seven percent want out within 5 years. But only 13% have a written personal plan. Only 15% have a written company transition plan. Only 14% rank exit strategy as their top priority.
That is not a planning problem. It is an identity problem.
Baby boomers built their businesses from scratch. The company is not separate from them — it is them. Thinking about succession means thinking about what comes next, and most owners have spent decades not doing that. The 2023 survey gave boomers an overall readiness score of 3.6 out of 6. The lowest of any generation surveyed.
The consequences of that score are measurable. PwC research cited in the National Readiness Report found that 75% of business owners profoundly regret selling their company within one year of the transaction. The regret is not usually about the price. It is about being unprepared for what selling actually means: loss of identity, loss of structure, loss of purpose. Owners who go into a transaction without a plan for what comes after tend to negotiate poorly, take bad deals, and feel worse when the check clears.
Only 30% of boomer owners have a written contingency plan covering the five Ds: death, distress, divorce, disability, disagreement. That means 70% have no documented answer for what happens to the business if something goes wrong before the planned exit.
What Happens When Owners Wait Too Long
The Edward Jones and Morning Consult research from June 2024 found that 31% of business owners who have identified a successor wait until only 1 to 2 years before the transition to begin having real discussions with that person. That is not a runway. That is a cliff edge.
A business that begins the sale process without preparation typically leaves 20% to 40% of its value on the table. The reasons are structural:
- Financial records are inconsistent or incomplete, which drives down the multiple a buyer will pay.
- Revenue is owner-dependent, meaning a buyer prices in the risk of losing key relationships when the founder departs.
- There is no management bench, so the acquirer must absorb the cost of recruiting or retaining talent post-close.
- The business has not been positioned for sale, so the narrative is reactive rather than planned.
Each of those items is fixable. None of them fix themselves. And fixing them requires time: typically 2 to 3 years of deliberate preparation before a sale process begins.
A business owner who wants to exit at 65 and starts planning at 63 is already behind. The owner who starts at 60 has options.
The Five Elements of a Real Succession Plan
Small business succession planning is not a single document. It is a set of decisions made in sequence, each one reducing risk for the owner and for any eventual buyer.
1. Financial documentation. Three years of clean financials, with a consistent treatment of owner compensation, personal expenses, and discretionary add-backs. A qualified buyer will reconstruct EBITDA from scratch. The owner who does it first, and documents the logic, controls the conversation.
2. Owner dependency audit. Which revenue is tied to the owner's personal relationships? Which operations require the owner's direct involvement? The answers define the transition risk. The goal is to reduce both before the sale process begins.
3. Management succession. Who runs the business if the owner is gone for 90 days? If the answer is "nobody" or "it falls apart," that is a valuation discount, not a minor detail. Building or retaining a capable operating team is among the highest-return investments a pre-exit owner can make.
4. Legal and structural cleanup. Ownership structure, employment agreements, customer contracts, IP assignments, lease terms. These items are deal-killers when discovered in due diligence. They are routine fixes when addressed 18 to 24 months early.
5. Personal financial plan. The business is often the majority of the owner's net worth. The sale proceeds need a destination. Only 35% of boomer owners have a written personal financial plan. That means most owners are making the largest financial transaction of their lives without a plan for what to do with the money.
Why Selling to PE Beats Most Alternatives
The most common paths for a boomer business exit are: sell to a family member, sell to an employee group, sell to a competitor, or sell to a private equity firm.
Family transfers carry emotional complexity and often require seller financing at below-market terms. Employee buyouts require sophisticated structuring and typically result in a slower cash-out for the owner. Competitors may pay a strategic premium, but they also bring integration risk and may not honor commitments made to employees or culture.
A disciplined PE buyer offers something different: a defined process, institutional-grade due diligence, the ability to close, and a track record that can be verified. For a business owner who has spent 30 years building something, the quality of the buyer matters as much as the price.
The business succession planning process at PGC is built around one principle: respect the owner's legacy. A veteran-founded PE firm does not acquire businesses to strip them for parts. It acquires businesses to build on what works. That is a different conversation than what most boomer owners expect when they hear "private equity."
What Buyers Look For
The best-prepared businesses share a pattern. They run with documented systems, not on owner judgment alone. They have stable customer concentrations, typically no single client above 20% of revenue. Their financials are clean, their management teams are solid, and the owner can describe the business clearly without being the business.
That description sounds like basic operations. It is. But fewer than 15% of boomer-owned businesses entering a sale process meet all of those criteria without significant pre-sale work.
The opportunity for the prepared owner is real. A business that checks those boxes commands a premium multiple. In the lower middle market (companies with $2 million to $10 million in EBITDA), the range between a poorly prepared business and a well-prepared one can be two to three turns of EBITDA. On a $5 million EBITDA business, that is $10 million to $15 million of value.
The Silver Tsunami is real. It is accelerating. And the owners who plan for it will do dramatically better than the ones who wait until there is no time left.
Frequently Asked Questions
How many small business owners are approaching retirement age right now?
According to Gallup's 2025 Pathways to Wealth Survey, 52.3% of U.S. employer-businesses are owned by people 55 or older. That is approximately 3 million companies with a combined workforce of over 32 million employees.
Why do most baby boomer business owners lack a formal succession plan?
The 2023 National State of Owner Readiness Survey found three main reasons: owners feel succession is not yet a priority, they are too busy to focus on it, and many have tied their personal identity to the business, making exit planning feel like preparing for loss rather than preparing for opportunity.
How much value do unprepared businesses lose in a sale?
Businesses that enter a sale process without deliberate preparation typically leave 20% to 40% of their potential value on the table. The primary drivers are inconsistent financial records, owner dependency in key relationships, and the absence of a capable management team that can operate without the founder.
What is the typical timeline for meaningful succession planning?
Most advisors recommend beginning the process 3 to 5 years before the intended exit date. The Edward Jones 2024 survey found that 31% of business owners wait until only 1 to 2 years before the transition. That window is too short to fix structural issues that affect valuation.
Jeff Barnes is a partner at Patriot Growth Capital, a veteran-founded private equity firm focused on acquiring and growing lower-middle-market businesses. Patriot Growth Capital does not provide investment advice and does not act as a broker or securities dealer. Nothing in this article constitutes a solicitation to buy or sell any security or business interest.
