Millions of Small Businesses Face Succession Crisis Amidst Aging Owner Exodus
JPMorgan Chase CEO Jamie Dimon warned in March that the American Dream was slipping out of reach for too many people. Six months later, the bank points to a specific problem: millions of ageing small-business owners are approaching retirement without a clear plan for what happens to their companies.
A new report from JPMorgan Chase estimates that around 12 million businesses, representing nearly $10 trillion in assets, could change hands over the next decade. However, only 8% of business owners surveyed by the bank had reached an advanced stage of succession planning.
The 'Silver Tsunami' refers to the impending transfer of wealth from baby boomers to younger generations. Estimates suggest that around 2.3 million businesses owned by baby boomers will transition in the next decade, representing one-sixth of US jobs. The issue is not limited to small businesses, as research shows that at over a third of S&P 500 companies, the CEO and CFO are simultaneously within retirement age without a disclosed succession plan.
JPMorgan Chase is using this problem to support various bills aimed at promoting business succession planning, including the American Ownership and Resilience Act. The bank's report also calls for the Small Business Administration (SBA) to create a national succession toolkit.