ISSUE 003
The silver tsunami has been about to arrive for twelve years
I went looking for how many Missouri businesses are about to change hands as their owners retire, and came back with numbers that differ by a factor of five. Working out why turned out to be more useful than the answer, and there is one finding underneath all of it that I think genuinely matters for a small town.
An idea worth thinking about
Owners don't sell because they turned 65
The Federal Reserve Bank of Minneapolis looked into why the predicted wave of business sales kept not materialising. The oldest boomers reached retirement age in 2013, and even strong conditions pushing sale prices up did not produce a big uptick in sales. Census data instead show growing numbers of self-employed people working past retirement age.
The explanation they report from people who broker these sales is that the decision is rarely about age. It turns on emotional factors or personal circumstances — ill health most often. Many owners find meaning in ownership and are in no hurry to stop. Some cannot afford to. One broker put it that a lot of these owners' identity and reason to get up in the morning is tied to the business, so turning 65 changes nothing.
If that's right, every projection built on a retirement-age curve is measuring the wrong variable. The trigger isn't a birthday, it's a health event — which is unforecastable individually and, crucially, arrives at the worst possible moment for getting a good price. The Fed piece is from 2023 and rests substantially on practitioner interviews rather than measurement, so hold it accordingly. But the mechanism it describes explains a decade of failed predictions better than the alternative does.
Read the Fed article
A tool I disappeared into
The Federal Reserve's own small business survey, free and without a sales motive
The Federal Reserve System runs the Small Business Credit Survey and publishes the results and analysis openly at fedsmallbusiness.org. It's an annual instrument with documented methodology and a large sample, covering financing, credit outcomes, firm performance and owner circumstances, with regional cuts.
What makes it the right starting point for anything in this territory is what it isn't. The Reserve Banks are not paid when a business changes hands. Almost every other source you'll surface searching succession is a broker, a marketplace, or an exit-planning practice, and their figures are compiled to make a case about market opportunity.
Use it as your baseline and treat industry surveys as commentary on top. Where the two agree you can rely on it. Where they diverge, the question worth asking is who benefits from the larger number.
Open the survey data
Learn something
Half of owners who sell are not retiring
The IBBA and M&A Source Market Pulse Report has tracked what actually pushes sellers to market for over a decade, and the headline finding cuts against the whole retirement framing. Retirement is the single most common reason, but only about half of owners who sell are retiring. The other 40 to 50 percent sell for something else entirely: burnout, family issues like divorce or illness, an unsolicited offer, or a new opportunity.
Burnout ranks second, and the consequence attached to it is the part worth internalising. By the time an owner is burned out enough to sell, the business has often already lost value — neglected maintenance, missed opportunities, and the effect on staff and customers show up in the numbers a buyer looks at. Selling from exhaustion is selling from a weak position, structurally.
The same survey work reports that around 80 percent of owners had no exit plan in the year before they put the business on the market. Not "no formal plan" — none. Reaching this via a broker's column rather than the source report is a limitation worth stating, since brokers have an obvious interest in owners planning earlier, but the finding is consistent across their own decade of data.
Read the Market Pulse findings
What we’re seeing
Employer firms plan to sell. The thirty million businesses with no employees mostly plan to close.
Gallup's research on succession contains the split that the tsunami coverage almost never reports, and it is the one that matters for a small town. Among employer businesses — roughly six million private-sector firms, of which about three million are owned by people 55 or older — 74 percent plan to sell or transfer ownership.
Now the other group. Businesses with no employees number around 30 million. Only 35 percent of those owners plan to transfer ownership through a sale or gift. About 27 percent plan to close the business outright. Forty percent say they don't know.
That is the actual shape of the thing. The businesses with staff and books and a payroll mostly intend to change hands, and there is an industry ready to help them. The sole-proprietor operations — the one-person contractor, the bookkeeper, the shop where the owner is the business — mostly intend to stop, or haven't thought about it. In a county of a few thousand people, a large share of what exists is in the second category.
I want to be careful not to overclaim what follows. A one-person business closing is not automatically a loss to a community; sometimes the work migrates to a neighbour, and sometimes the business was the owner's skill and could never have been sold to anyone. But 40 percent answering "I don't know" is not a market outcome. It's an absence of a conversation, and that is a thing a chamber, a lender, or a neighbour can actually change without anybody buying anything.
One last word on the numbers. If you search this topic you will find boomer-owned business counts from 2.3 million to about 12 million, succession-plan rates that both confirm and contradict each other, and job-loss figures ranging over eight million positions. Nearly every one of those pages is published by a business broker, an acquisition marketplace, or an exit-planning firm. Those are people paid when a transaction happens, writing about how many transactions are coming. That does not make them wrong. It does mean you should not take any of those figures to a bank without finding out who counted.
Gallup, small business succession research
One question
Do you know what happens to your business if you stop?
Sold, handed over, closed, or genuinely no idea. Reply with one of the four — "no idea" is the honest answer for most people and I'd like to see whether that holds here.
More in this pillar as it's written.
— Shana
Sources link to the original publisher, never to a summary.