Millions of baby boomers are about to retire. Their businesses employ half of America. And the system that’s supposed to transfer those businesses to the next generation barely exists.

We’ve spent the last four years building Baton in the middle of the largest ownership transition in American history. And I want to be honest with you: even I didn’t fully grasp the scale of what’s coming until McKinsey dropped a report last month that put hard numbers on something we’ve been living and breathing every single day.

The headline: by 2035, roughly six million small and medium-size businesses will need to change hands as their owners retire. More than one million of those firms are viable candidates for sale, representing up to $5 trillion in enterprise value.

But here’s the part that should make you sit up: today, 92% of small business exits end in closure—not a sale, not a transfer, not a handoff. They just… disappear. Not because the businesses are failing. Because the infrastructure to connect retiring owners with new buyers simply does not exist at scale.

This is a piece I’ve been wanting to write for a while. Consider it a “state of the state:” everything I’ve learned about the opportunity, the problem, and why I believe this decade will be remembered as the moment America either figured out how to pass the baton on its small business economy, or let it drop.

The Demographic Tsunami Is No Longer Coming. It’s Here.

Let’s start with the numbers, because they’re staggering.

• Baby boomers alone own nearly a quarter of all small businesses—roughly 2.34 million firms.

• They collectively generate over $5.1 trillion in annual revenue. 

• Approximately 10,000 boomers are hitting retirement age every single day, and that pace will continue through 2027. 

These aren't abstract demographics. It's the couple who built their painting business from the ground up in Jackson, Wyoming. It's the Brooklyn baker who spent ten years turning a small bakery into a neighborhood staple. They’re the people who own the restaurants and HVAC companies and dental practices and machine shops and landscaping businesses that employ your neighbors.

When those businesses disappear, the jobs go with them. The local tax base erodes. Supply chains fragment. Main streets hollow out.

McKinsey’s research projects that annual business exits could rise to 42% above 2011 levels, reaching as many as 665,000 per year. To put that in perspective: that’s more than 1,800 small businesses exiting ownership every single day for the next decade.

The Market Failure Hiding in Plain Sight

Here’s what makes this different from a typical market cycle: the problem isn’t that these businesses are failing. Many of them are profitable, essential, and deeply embedded in their communities. 

The problem is that the system designed to transfer them from one owner to the next is, and I’m being generous here, broken.

According to McKinsey, of the 510,000 SMBs that exited the market in 2022:

• 92% closed rather than transferred. 

• Just 5% were sold. 

• Another 3% were handed to family members. 

The research suggests that 6-13% of these closures could have been avoided. Many of these firms are shutting down not due to economics but due to predictable life events like retirement, combined with a total lack of succession planning or buyer access. 

The Exit Planning Institute reports that fewer than one in three small business owners have a documented exit plan. Put another way, two-thirds of small business owners have no written plan for the most consequential financial event of their lives, and the window to prepare is closing fast.

Meanwhile, on the Demand Side: A Buyer Boom Is Emerging

Here’s the thing that gives me enormous optimism: demand is not the problem. Interest in acquiring small businesses has never been higher.

Entrepreneurship through acquisition (ETA) has exploded from a niche MBA strategy into a genuine movement. More than $682 million of ETA equity capital was deployed in the U.S. and Canada between 2022 and 2023. The model has delivered a 35.1% pre-tax IRR and a 4.5x return on investment for investors. Every major business school now hosts ETA conferences. Stanford, Harvard, Wharton, Darden, Babson, Kellogg; it’s become the fastest-growing career path on campus.

And it’s not just MBAs. Platforms like Baton, BizBuySell, and DealStream are seeing record traffic from career-changers, military veterans, and first-generation entrepreneurs looking to skip the startup grind and step into a business with proven cash flow, existing customers, and established operations. The appeal is obvious: lower risk than a startup, faster path to ownership, and the chance to build wealth on top of something that already works.

But there’s a catch. Even as buyer interest surges, the system can’t absorb it. Deal sourcing remains fragmented. Financing is slow and bespoke. Due diligence is expensive and opaque. And post-close support, the scaffolding that helps new owners actually succeed after they buy, is virtually nonexistent. The constraint isn’t buyer capability. It’s system capacity.

The Geography of Risk: Who Loses When Businesses Vanish

The impact of this wave won’t be evenly distributed. It never is. 

Our own data tells a similar story. Below is a breakdown of our buyer pool and listings by state. Notably, activity remains concentrated in just a handful of them: California, Texas, Florida, and New York.

Rural America faces the steepest risk. In states like Maine, Montana, Vermont, and Wyoming, the enterprise value at stake from small business transitions can reach as high as 3.2% of state GDP. In many of these communities, SMBs account for more than half of total employment. These areas already face declining business dynamism, limited new business formation, and weak in-migration of entrepreneurs. Even a modest uptick in closures can cause irreversible damage. 

Baton listings by state: darker green indicates higher listing concentration.

Urban markets, including California, Florida, New York, Texas, hold about 86% of the total enterprise value at risk, but they also have deeper buyer pools, stronger advisory networks, and more robust financing ecosystems. The system, such as it is, sort of works in cities. Outside of them? Not so much.

The flip side is the most exciting part: closing those participation gaps could unlock $2–3 trillion in new household wealth. For Black buyers alone, achieving ownership parity could increase their share of captured enterprise value from $87 billion to $369 billion: a more than 4x increase. For women, reaching parity could unlock approximately $700 billion. It’s one of the most powerful near-term wealth creation opportunities in the American economy.

Five Phases, Five Failure Points

McKinsey maps the ownership journey across five phases, and it’s worth walking through each one because the bottlenecks are specific and fixable.

1. Aspiration and Preparation: Most entrepreneurs don’t even know buying a business is an option. ETA is still concentrated in a handful of elite MBA programs. Meanwhile, most retiring owners underestimate the time and effort required to prepare for a sale. There’s no consistent curriculum, no accessible on-Ramp.

2. Search and Sourcing. Buyers and sellers can’t find each other. Most SMB sales happen through informal networks and word-of-mouth, not transparent marketplaces. Broker networks vary wildly in quality. There’s no central registry connecting ready buyers with ready sellers.

3. Deal Structuring and Financing. Even when a match happens, the deal often dies at the financing table. SBA 7(a) loans—the main product—require high equity contributions and personal guarantees that many first-time buyers can’t meet. Black and Latino buyers face higher loan denial rates. There are no standardized templates or risk-sharing mechanisms to speed things up.

4. Ownership and Value Creation. After closing, new owners are on their own. There’s no “accelerator for acquirers.” No structured post-close support. The departing owner leaves, often taking critical institutional knowledge with them, and the new owner has to figure it out solo.

5. Succession and Exit. Most owners wait way too long to plan. Family dynamics complicate decisions. Advisors in smaller markets lack experience with complex transfers. By the time the owner signals intent, it’s often too late to orchestrate a smooth transition.

Each of these phases represents both a failure point and an opportunity to build something better.

Why This Time Is Different: Technology Finally Catches Up

Here’s why I believe we’re at an inflection point.

When Zillow came along, it didn’t create the housing market. The housing market already existed. What Zillow did was make it transparent, accessible, and navigable at scale. It gave every homeowner a Zestimate and every buyer a starting point. The infrastructure for residential real estate transactions had been built over decades, MLSs, title companies, standardized contracts, licensed agents, and Zillow sat on top of it, bringing the whole thing into the digital age.

Small business M&A is where residential real estate was before that infrastructure existed. There’s no MLS for businesses. No standardized data room. No universal NDA. No reliable way for an owner to know what their business is worth without paying thousands of dollars. The information asymmetry is staggering, and it keeps both sides of the market frozen.

AI and modern software are changing this, scaling and automating processes that were previously only possible with armies of analysts and brokers. Think of:

• Automated valuations. 

• Intelligent deal matching. 

• AI-powered lead triage and buyer qualification. 

• Data rooms that populate themselves from connected accounting systems. 

• Natural language search across hundreds of thousands of business listings.

We’re building the connective tissue that this market has never had: the infrastructure layer that makes it possible for ownership transfer to happen routinely, not episodically. And AI is the unlock that makes it work at the scale this moment demands.

What We’re Building at Baton

When my co-founder Dylan and I started this company, we looked at the small business acquisition market and saw a $5+ trillion industry stuck in the dark ages. Owners didn’t know what their businesses were worth. Buyers couldn’t find quality deals. Brokers were gatekeepers, not enablers. The entire process was opaque, slow, and stacked against both sides.

We’ve built the modern, tech‑forward marketplace for buying and selling small businesses, built on data‑driven valuations, verified listings with real financials, intelligent buyer–deal matching, and dedicated acquisition advisors who actually move deals forward.

With intelligent algorithms and powerful AI baked into one platform, our sellers and buyers are 7x more likely to close a deal compared to the industry average, thanks to features like:

• Our AI search, which instantly surfaces high‑quality opportunities that match your budget, interests, and experience.

• A unified seller portal for documents, messaging, and offers.

• Dedicated support from our advisors, who use AI to automate busywork so they can focus on strategy, negotiation, and getting your deal across the finish line

The marketplace is just the beginning. The real opportunity is building the end-to-end infrastructure for ownership transfer or the “full stack” of services, data, and technology that makes buying a small business as transparent and supported as buying a home. Valuations. Financing navigation. Due diligence. Post-close support. All of it, connected, and all of it powered by technology that scales.

The Decade That Decides

McKinsey puts it well: “Within a decade, buying a business could be as common, visible, and supported as starting one.” I believe that. I believe it because the demand is there, the supply is there, and the technology to connect them is finally here.

But it won’t happen by itself. It requires coordinated action across the ecosystem: banks and lenders who modernize their products for small-deal acquisitions. Corporates who recognize that their supply chain stability depends on successor owners stepping up. Policymakers who fund succession planning as seriously as they fund startup incubators. Universities that teach acquisition alongside founding. And yes, technology platforms that make the market function at scale.

The next decade will determine whether the Great Ownership Transfer becomes a $5 trillion engine of inclusive growth or an accelerant of economic erosion. Whether millions of viable businesses find new stewards or simply vanish. I know which outcome I’m building toward.

If you’re a small business owner thinking about what’s next, we want to help you plan that transition. If you’re an aspiring entrepreneur looking for a faster, smarter path to ownership, we want to show you what’s possible. And if you’re an investor, a policymaker, a reporter, or just someone who cares about the future of small business in America, I hope this piece gives you a framework for understanding what’s at stake.

The baton is in the air. Let’s make sure someone catches it.

Sources & Further Reading

McKinsey Institute for Economic Mobility: "The Great Ownership Transfe: A New Era of Business Stewardship" 

Stanford Graduate School of Business: 2024 Search Fund Study 

Exit Planning Institute: 2023 National State of Owner Readiness Report 

U.S. Census Bureau: Annual Business Survey; Statistics of U.S. Businesses; Business Dynamics

Guidant Financial: Small Business Trends Report

Alliance for Lifetime Income: “Peak 65” Report

ImpactAlpha: "Broadening Opportunity in the Fast-Growing Market for ETA"