By 2035, roughly 6 million small and mid-sized U.S. businesses owned by baby boomers are expected to face ownership transitions, with more than 1 million of these companies being viable businesses, representing up to $5 trillion in enterprise value. Small businesses already account for 99% of U.S. companies, employ more than 60 million people, and generate roughly 35% of business revenue. As founders retire, the question is not whether quality businesses exist – it is whether capital and operators are in place to transition them successfully. An inability to do so places local jobs, tax channels, and mobility pathways at risk.
Much of this opportunity sits within the lower middle market, where many founder-led businesses operate below the typical scale targeted by larger private equity platforms. While traditional private equity tends to focus beyond the $3–$10 million EBITDA threshold, independent sponsors are increasingly active in the identification, acquisition, and scaling of these businesses. The majority of these transactions represent founder-led companies with durable cash flows and meaningful regional economic impact – precisely the type of businesses that can support structured acquisition financing and long-term operational growth.
Here at Bankers Edge Advisory, we work alongside independent sponsors to structure the debt and capital solutions required to execute these acquisitions.
As the ownership transition accelerates, the combination of experienced operators, disciplined underwriting, and flexible capital will play a pivotal role in converting this wave of retirements into the next generation of lower-middle-market ownership.
Source: “The Great Ownership Transfer: A new era of business stewardship” – McKinsey & Company
Richard Consul, CFA | Mitch Vermet, CFA, CAIA