Main Street’s Tidal Wave of Transition

Given the significant percentage of closely held businesses owned by baby boomers, it is estimated that companies worth approximately $100 trillion will be passed on to successors, inheritors or ultimately sold in the marketplace in coming years.

Some scholars have referred to this coming wave of transition as a kind of “silver tsunami.” And while large public organizations receive a disproportionate amount of attention in the business media landscape and university scholarship, they actually account for a relatively small portion of all economic activity. In contrast, more than 130 million people in the United States work for employers with fewer than 100 employees, and 33 million small businesses in the country collectively account for more than 99% of all registered businesses.

The coming (and significant) shift of ownership coupled with the growing prominence of private equity investment into middle market companies raises questions both on what these companies are transitioning into and the corresponding impact on the economy and the communities these firms are embedded within.

Questions Considered

Questions about this wave of transition formed the crux of the 2023-2024 Olin Brookings Commission’s work, which included a new panel of experts representing business owners, private equity firms, antitrust regulators and business strategists from WashU Olin Business School, the Brookings Institution and beyond. Their work involved examining issues such as:

• The landscape of transition and the benefits of certain forms of transition over others.
• The financial and nonfinancial outcomes implicit in different forms of transition (e.g., bankruptcy rates, the degree to which these companies provide good jobs, the amount of capital that stays in the community).
• The policy landscape and broader cultural forces affecting transition.

In the study presented in Washington D.C on October 8^th, 2024, we illuminated these issues by:

• Identifying strategies used by distinct investors in the small business market
• Codifying how owner’s navigate trade-offs in transitions of business ownership
• Clarifying how different types of ownership structures affect workers in these firms
• Highlighting key policy implications based on these findings

The commission’s final report was titled “The Tidal Wave of Transitions on Main Street”. Download the report or watch a recording of the commission presentation