Olin Brookings Commission recommends policies to manage ‘silver tsunami’ impact

In the coming years, nearly half of small and medium-size business owners are expected to retire. As a result, an estimated $100 trillion in businesses will either be transferred to new owners, inherited or sold.

The effect of this unprecedented wave of ownership transitions — sometimes called a silver tsunami — combined with the rise of private capital investment in these markets, will ripple throughout communities and the economy, according to new research from Olin Business School at Washington University in St. Louis and the Brookings Institution.

Despite the inevitability of these transitions, many owners are unprepared. Recent research has shown that more than 85% lack a formal succession plan, according to Peter Boumgarden, the Koch Family Professor of Practice in Family Enterprise at WashU Olin.

Without thoughtful planning and policy interventions, local and federal governments could be unprepared for the inevitable transition, too, putting businesses, jobs, community cohesion and local economies at risk, Boumgarden added. 

With generous support from The Bellwether Foundation Inc., the Olin Brookings Commission — led by Boumgarden and Aaron Klein at the Brookings Institution — has studied this trend over the last year, paying particular attention to three key stakeholders in the transition: investors, owners and employees.

They presented their research findings, as well as a set of policy recommendations to aid the transition, Oct. 8 at the Brookings Institution in Washington, D.C.

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