There is a $3 trillion opportunity for Black and other minority entrepreneurs to become business owners as part of the “Great Business Transfer,” according to a new report from McKinsey.
“This is the largest ownership transition in modern US history,” said Shelley Stewart, a co-author of the report, senior partner and Chair of the McKinsey Institute for Economic Mobility. “This is a huge opportunity but there is also a challenge, the issue is many viable businesses may not successfully transfer because the market to connect buyers, sellers and capital is not built at scale.”
Researchers forecast 6 million small- and medium-sized businesses, or SMBs, will be available for acquisition by 2035. If Black, Latino and women entrepreneurs can increase ownership in these transitioning businesses, it has the potential to unlock $3 trillion in new household wealth, the report found.
McKinsey said the contrast between the opportunity and the risk is especially stark for the Black community.
Only 3% of U.S. business owners are Black compared to 13% of the population. If current trends hold, Black entrepreneurs are expected gain $87 billion of the transferring enterprise value. However, if they increase their participation in the Great Business Transfer, the number could jump to more than $369 billion. Conversely, without greater participation, disparities in wealth would only be increased according to the report.
