By Veronica Cardinale Ellinger, CEO
For millions of Baby Boomer business owners, retirement is approaching—and with it comes one of the most important decisions they will make as an entrepreneur:
What happens to the business when you’re ready to leave?
The answer matters not only to the owner. It can affect employees, customers, suppliers, families and entire communities.
Research from McKinsey & Company puts the magnitude of this transition into perspective. By 2035, approximately six million small and midsize U.S. businesses are expected to face an ownership transition as Baby Boomers retire. More than one million may be viable candidates for sale or employee ownership, representing as much as $5 trillion in enterprise value.
Yet historically, relatively few businesses have actually been transferred to another owner.
According to McKinsey’s analysis, approximately 510,000 small and midsize businesses exited the market in 2022. Of those exits:
Perhaps most importantly, McKinsey estimates that 6% to 13% of business closures could potentially have been avoided.
In other words, some viable businesses close, not because they failed, but because the owners never planned for the business’s transition.
For business owners approaching retirement, there is an important takeaway:
Don’t let closing become your exit strategy by default.
A successful company doesn’t automatically become a sellable company.
Owners can spend decades becoming experts at operating their businesses without ever having sold one. And because the demands of running a company rarely disappear, succession planning is easy to postpone.
McKinsey points to that lack of preparation as part of the problem. Its research cites the 2025 Gallup Pathways to Wealth Survey, which found that 27% of employer businesses with owners age 55 and older either were unsure of their long-term plans or intended to close permanently.
Fewer than one in three small-business owners have a documented exit plan, according to Exit Planning Institute research also cited by McKinsey.
That can create a dangerous situation.
An owner finally decides it is time to retire, only to discover that the financial records need work, too much of the business depends on them personally, a successor hasn’t been identified, or the company isn’t worth what they assumed it would be.
By then, there may not be enough time to address the problems.
Closing a Business Can Mean Losing More Than the Sale Proceeds
When a viable business closes, the owner isn’t the only person affected.
Employees may lose jobs. Customers lose a trusted provider. Vendors lose an account. Communities lose locally owned businesses and economic activity.
McKinsey estimates that successful ownership transitions over the coming decade could help preserve as many as 12 million jobs and approximately $250 billion in annual local spending power.
For the owner, there is another consequence: years of accumulated business value may disappear.
A company’s value may include much more than its equipment or inventory. Customer relationships, recurring revenue, employees, processes, reputation, intellectual property, contracts and market position may all contribute to what a buyer sees in an operating business.
Liquidating assets and shutting the doors may capture only part of that value.
A sale creates the possibility of transferring the business as a going concern—and allowing what the owner built to continue.
The answer starts well before your final day at work.
If retirement or another exit could be one to five years away, this is the time to begin determining whether your company could successfully transition to another owner.
Don’t build your retirement expectations around an assumption.
A professional business valuation can help establish an objective view of your company’s fair market value and identify the factors that are strengthening—or limiting—that value.
Sometimes the most useful part of an early valuation isn’t the number itself. It is discovering what could be improved while you still have time to improve it.
Try looking at the company from the perspective of someone considering investing their own money in it.
Is revenue consistent? Are the financial records clear? Is there a stable customer base? Are key employees likely to remain? Are systems and processes documented?
And perhaps most importantly:
Can the business succeed without you?
The more transferable the operation is, the easier it may be for a prospective buyer to envision taking ownership.
A business that cannot function without its owner can be difficult to transfer.
If every important customer relationship, operational decision and piece of institutional knowledge runs through you, begin changing that before you go to market.
Develop managers. Document processes. Strengthen customer relationships with the company rather than solely with the owner. Establish systems that another person can understand and operate.
You’re not making yourself unnecessary.
You’re making the business transferable.
Buyers and lenders will want to understand the financial performance of the business.
That means accurate financial statements, organized tax returns and documentation that helps a prospective buyer understand how the company generates revenue and cash flow.
Work with your CPA and other professional advisors early. Cleaning up several years of financial information immediately before a sale is very different from operating with clean records consistently.
McKinsey specifically recommends that owners preparing for succession ensure the financial health of the business is in order and identify opportunities to make the company more attractive to prospective buyers.
Selling to an outside buyer isn’t the only possible path.
Depending on the company and the owner’s goals, options could include a third-party sale, family succession, management buyout, employee ownership or another form of ownership transfer.
Understanding those possibilities early allows you to compare them rather than making a rushed decision when retirement becomes imminent.
Selling a business isn’t something most owners do repeatedly.
Your advisory team may include a business broker or M&A advisor, CPA, attorney, financial advisor and other specialists depending on the complexity of the transaction.
A business broker can help you understand marketability, valuation, buyer expectations and the sale process before the business ever goes to market.
That early conversation can be particularly valuable if you discover there are changes you should make first.
This may be the most important step.
McKinsey’s 2026 discussion of the Great Ownership Transfer specifically encourages business owners to begin succession planning years in advance, including evaluating financial health and making improvements that could make the business more attractive to buyers.
Waiting until you’re exhausted, facing a health issue or simply ready to walk away reduces your options.
Starting one to five years before a potential exit gives you something a last-minute seller doesn’t have:
time.
Time to improve value.
>Time to make the business less dependent on you.
>Time to identify the right transition strategy.
And time to find the right buyer.
The coming wave of Baby Boomer retirements is often discussed as a problem.
It doesn’t have to be.
On the other side of these transactions are entrepreneurs looking for established businesses to acquire, employees who may be able to continue their careers under new ownership, and communities that benefit when successful local companies remain open.
For business owners, the opportunity is equally significant.
You spent years—perhaps decades—building an asset. A well-planned sale may allow you to realize some of that value while giving someone else the opportunity to continue what you started.
Not every business will ultimately be sellable, and a sale is never guaranteed. But an owner shouldn’t discover whether a business could have been sold after it is too late to pursue that option.
If you’re thinking about retiring within the next one to five years, don’t wait until you’re ready to leave to start thinking about your exit.
Begin with three questions:
What is my business worth?
Is it positioned to transfer successfully to another owner?
What should I do now to improve my options later?
At Murphy Business Sales, our brokers work with business owners to help them understand business value, prepare for a potential sale and navigate the confidential process of transitioning a business to new ownership.
Before closing the doors on what you’ve spent years building, find out whether there may be another option.
Find a Murphy Business Sales broker near you to start a confidential conversation about your business, its value and the steps you can take today to prepare for what comes next.
Source: McKinsey & Company, “The Great Ownership Transfer: A New Era of Business Stewardship,” McKinsey Institute for Economic Mobility, February 2026.