This “Great Ownership Transfer” poses a critical structural test for the U.S. economy. Small businesses account for 99% of all U.S. companies and employ nearly half of the nation’s workforce. However, the report warns that without significant systemic changes, this demographic milestone could result in widespread economic erosion rather than renewal. Today, an alarming 92% of small-business market exits occur through closure, while only 5% are completed as sales, and 3% are transferred to new owners (although the report does not link this percentage to the total $5 trillion valuation).

This is set to become a bigger and bigger issue because of the massive wave of boomer retirements that is underway. Research firm Cerulli Associates, widely credited with coining the term “Great Wealth Transfer,” estimated last July that Gen X would see $1.4 trillion every year for the next decade, on average, as this wave swells. Over the long term, though, millennials are due to become the richest generation on record. UBS estimated last December that nearly $300 billion was inherited in 2025, marking the what many consider the start of the transfer.

The root of the problem lies in a mismatched support system, according to authors Ken Yearwood, Nathan Marks, Shelley Stewart III, and Nick Noel, who interviewed many small-business buyers, sellers, advisors, and investors, and analyzed publicly available data, proprietary datasets, and established research literature. “Buying and selling a small business is often harder than starting one because the systems that support entrepreneurship in the United States are currently built for founding companies, not transferring them,” they wrote. Viable firms frequently shut down because pathways to succession are limited, opaque, or overly costly, and navigating the acquisition journey—from initial preparation to post-close value creation—is fraught with systemic friction.

The risk of shutting down is heavily concentrated in the “missing middle.” Nearly 80% of projected exits are expected among micro and emerging middle-market businesses valued at less than $2 million. For these locally rooted firms, that valuation is too low to catch the attention of institutional buyers like private equity, but too large for smaller-time buyers, leaving them largely invisible to the market. Rural communities, which rely heavily on these smaller firms for employment and tax bases, face disproportionate exposure; a failure to transfer these businesses threatens to permanently hollow out local economies. Furthermore, labor-intensive industries essential to daily life—such as retail trade, construction, and food services—account for roughly one-third of all businesses anticipated to be caught in this “missing middle.”

Yet alongside the risk of mass closures lies a historic opportunity to reshape economic mobility. Today’s small-business owners are overwhelmingly older, white, and male. Under current trends, women, Black, and Latino individuals combined would capture only about 28% of the transferring $5 trillion value. If parity in ownership participation were achieved, however, Black individuals could see their wealth capture increase more than fourfold to approximately $369 billion, while parity for women could unlock roughly $700 billion in wealth.

To convert this looming transition into an engine of mobility, McKinsey emphasizes the urgent need to build a coordinated market for ownership transfer. Independent and community-based buyers represent an essential demand segment but are heavily constrained by a fragmented system. Current financing tools, like the SBA 7(a) loan, require high equity and full personal guarantees that many first-time or underrepresented buyers cannot meet. The report urges banks, policymakers, and civic institutions to modernize underwriting standards, bundle advisory services, and treat small-business acquisitions as a scalable market rather than bespoke, one-off transactions.

Services are already appearing to fill these gaps, however, such as the small‑business marketplaces BizBuySell, MicroAcquire, and Baton. Also, online SBA loan platforms have begun to chip away at the opacity that McKinsey highlights. Buyers today are not just institutional investors but also independent entrepreneurs, search funds, and employee‑ownership transitions—all of which have seen notable growth. For example, ESOP and cooperative conversions have grown significantly in recent years, creating models for equitable ownership that do not rely solely on traditional private capital channels.

Ultimately, this decade will determine whether the impending demographic wave becomes a story of tragic business loss or “the inflection point when business ownership became a broader pathway to mobility.”

For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.