Baby Boomers Are Exiting $5 Trillion of Businesses - But Most of it Won't Be Sold

This Week in ETA:

McKinsey’s latest study on Entrepreneurship Through Acquisition is packed with insights. I touched on a few on LinkedIn, but here’s the fuller picture. The net-net is that the market for business transfer as baby boomers retire is huge (we know this) - to the tune of $5 trillion in enterprise value. However, most exits today end in closure, not transfer, because succession markets are underdeveloped and deal infrastructure is fragmented. Some things I took away:

• Rural businesses are at high risk but also high opportunity - these firms anchor local jobs and services, yet transitions often fail due to limited buyers.
• Smaller firms under $5M enterprise value are hardest to sell - transaction costs and market fragmentation make these deals less attractive, even when the business is healthy.
• Independent buyers remain critical - searchers and prepared individuals are best positioned to step in as Baby Boomers retire.
• Diversity gaps are stark - only 28% of transferring value is likely to reach women or Black and Latino owners, highlighting a huge untapped opportunity for inclusive ownership.
• Effective transitions preserve jobs and local wealth - a well-functioning market could keep up to 12M jobs and $250B in annual local spending in place.

We’re at an exciting point of opportunity in this space - if we can partner with you in your search to help you meet this moment, we’d be honored to do so.

Partner Perspective:

Caleb Basile, QoE Prep: Top-Ten Firm CPA Turned Entrepreneur - Why I Started QoE Prep

I started QoE Prep because I was frustrated with the status quo and eager to meet the opportunity I saw for efficient, detailed, and quality Quality of Earnings reports. Before diving into quality of earnings, I worked across tax, audit, bookkeeping, and CFO advisory roles. That mix gave me a front-row seat to how small and mid-sized businesses actually operate — and where financial “blind spots” often hide.

In 2021, I pivoted into QoE work almost by accident. I loved the high-stakes, fast-moving nature of the work and immediately started building templates, systems, and processes to do it better. What once took 160 hours could be done in 40 — and clients started coming directly to me.

QOE Prep was born from that experience, and now we are a small, nimble firm laser-focused on making complex financial diligence practical, actionable, and fast. We’ve grown from white-label partnerships to closing multiple deals per month, and I’m excited for what’s next.

If you’re curious about QoE, deal diligence, or navigating acquisitions, I’d love to connect and share insights. Read our full story here.

Plus:

• We’re aligned with these points on the ideal buy box for an independent sponsor deal. While it seems like the model enables more flexibility in what you purchase, the deal must still pass the sniff test for valuation, cyclicality, customer concentration, and more.

• For those specifically acquiring accounting firms, this is an interesting perspective on anchoring valuations to SDE and EBITDA multiples rather than traditional revenue benchmarks

Question:

Hit reply and tell us - What other takeaways did you have from the McKinsey report?

P.S. - Share Your Buy Box:

If you’re a searcher, let us know your buy box! We see a lot of proprietary deals and love to bring right-fit searchers in on them.