This is Part I of a three-part series from Patrick Flood, Founder & CEO of Owners In Honor, examining America’s approaching small-business ownership transition. McKinsey estimates roughly six million small and mid-sized businesses will face an ownership transition by 2035 — with more than one million viable candidates for sale or employee ownership, representing up to $5 trillion in enterprise value. Part I tackles the first of three central questions: where is the opportunity actually forming?
Treating Acquisition Like an Intelligence Problem
Flood draws directly on his military background, framing market search the way an intelligence analyst approaches uncertainty. Most buyers start by asking “what’s for sale right now?” — but by the time a business reaches a broker’s listing, the owner has already crossed several thresholds toward selling, and other buyers may already be circling. The more useful question: where are attractive, transferable, financeable businesses likely to need new owners in the next three to five years?
Leading vs. Trailing Indicators
Flood draws a clear distinction. Trailing indicators — completed transactions, asking prices, closed deals — tell you what already happened. BizBuySell’s Q2 2026 data shows 2,117 completed transactions, a 10% decline from both the prior quarter and last year, alongside tighter credit and greater buyer selectivity.
Leading indicators tell you where supply is forming next. Census Bureau data on business age, owner age, and veteran status — layered against industry and geography — can flag succession pressure years before a listing appears. The U.S. had roughly 5.9 million employer firms in 2023, with veterans owning about 261,000 of them.
The Intelligence Sequence
Flood lays out a deliberate search order: Industry → Geography → Owner and Business Demographics → Size → Financeability → Availability → Transaction. Availability — the actual listing — comes last, because it’s the final product of an owner’s decision, not the starting point of a smart search.
- Industry: Succession pressure varies sharply by sector. In capital-intensive industries like manufacturing and utilities, McKinsey found more than 60% of owners are over 55, and roughly 26% are 65 or older.
- Geography: National averages hide major regional differences. The more revealing number isn’t the listing count in a market — it’s the ratio of listings to the total population of similar businesses there.
- Demographics: More than half of U.S. small-business owners are over 55; the Exit Planning Institute estimates 73% of privately held companies plan to transition within ten years.
- Size: Flood calls this the “transferable middle” — businesses big enough to require real capital but often too small for institutional buyers, where the individual acquirer-operator fits best.
- Financeability: 78% of buyers surveyed by BizBuySell expect to use SBA financing — making SBA eligibility central to both sides of a deal.
When Financing Gets Personal
One of the sharpest data points in the piece: 90% of buyers expect seller financing to be part of their acquisition strategy, but only 29% of sellers plan to offer it — nearly half say they’d decline outright. Flood frames this gap as more than financial; a seller carrying a note stays economically tied to the business after closing, which turns trust and rapport into part of the deal’s actual economics.
Discipline Without Paralysis
Flood closes with a caution for buyers running long searches: patience is necessary, but search fatigue is real. Watching peers close deals can make weak economics start to look acceptable. His advice — hold firm on mission-essential criteria, stay flexible on preferences, and recognize the difference between disciplined patience and drifting into a bad deal.
Read Part I of “The Coming Ownership Transfer” in full on LinkedIn →
https://www.linkedin.com/pulse/coming-ownership-transfer-intelligence-succession-capital-flood-ktsyc/
