Baby Boomer Retirements to Drive SMB Deal Volume

Approximately six million small and midsize businesses (SMBs) are projected to change ownership in the U.S. by 2035, with about one million deemed viable for sale rather than closure. This represents the most significant structural shift in SMB mergers and acquisitions in a generation, potentially moving up to $5 trillion in enterprise value from retiring baby boomer owners over the next decade, according to a February 2026 report by the McKinsey Institute for Economic Mobility.

The demographic reality is that over half of U.S. business owners, specifically 52.3%, are aged 55 or older, according to the Census Bureau. This large cohort is poised to make exit decisions within a timeframe relevant to current market planning. Such a substantial group is unlikely to transition smoothly; instead, their exits are expected to occur in waves influenced by health, market conditions, and owner fatigue.

Data suggests the timeline for these transitions is compressing. A Federal Reserve survey found that 62% of business owners have moved their retirement plans forward due to factors like financing costs, staffing pressures, and general exhaustion from operating in a challenging economic climate. Consequently, the next three to five years are likely to be more critical for deal volume than the latter half of the decade, meaning buyers who delay may miss out on the most attractive opportunities.

However, the market's infrastructure is not adequately prepared for this scale of transaction. Acquisition financing is fragmented, advisory services primarily cater to larger deals, and the process of matching buyers and sellers frequently falters. Consequently, many businesses still end up closing rather than being sold because the necessary support systems for matchmaking, financing, and deal execution have not scaled to meet the impending wave of exits. Businesses that are well-prepared with clear financials and valuations are therefore likely to stand out and attract buyer interest.