Perchance to Economics

As of writing, a massive intergenerational wealth transfer is underway – if not already happening as we speak. This is not a passive transfer of wealth. It is an active competition over who captures it. Who is preying on whom? To put it simply:

-> Sellers under time pressure → become price-takers
-> Capital exploits opacity → buy quality assets below intrinsic value
-> Intermediaries → extract fees from fragmentation
-> Platforms (future AI layer) → control deal flow

As Baby Boomers and the Silent Generation retire or plan to do so, estimates of trillions of dollars are expected to change hands. The New York Times on May 14th 2023 estimated that by 2045, upwards of $84.4 trillion in assets will be bequeathed. Of that, a staggering $72.6 trillion will be heading directly to the heirs.

Now we are almost halfway done with 2026. What has happened since? McKinsey & Co.’s Institute for Economic Mobility authored a report on the matter in February, and it is quite revealing, albeit limited on the American fiscal frontier. It describes a broken, fragmented, opaque market – exactly the type of system AI historically restructures.

According to McKinsey’s IEM, the issue is not a lack of businesses or buyers. Rather, the challenge is a broken system for transferring ownership. A $5 trillion opportunity exists – not because of innovation, but because of inefficiency. It seems strange but when examined, it makes sense:

-> Inefficiency → opportunity
-> Opacity → extraction
-> Fragmentation → predation

Fragmented markets do not eliminate value – they redistribute it to those best positioned to navigate them.

This is not just a demographic shift – it is a structural moment that will determine who owns the next generation of the economy. The data is more than intriguing:

~6 million SMBs will transition ownership by 2035

~1 million viable firms (~$5T value) could be transferred instead of closed

Failure → mass closures, job losses, and local economic decline

Success → one of the biggest wealth redistribution opportunities in decades

It is important to note that per IEM, most businesses do not get sold – they die. Around 92% of exits are closures, not transfers. Only ~5% sold and ~3% are transferred. Thus, that is the central inefficiency: viable businesses disappear because the system fails, not because they are bad.

So, who will buy them? Most businesses are too small for private equity, yet also too complex for informal buyers. As a result, they fall into a dead zone of capital + advisory support. This is where the majority of closures will happen. Even worse, the buyer side is fragmented. The three main buyer types are:

I. Institutional (PE, corporates) → efficient but only for large deals
II. Independent buyers (ETA, entrepreneurs) → critical segment, but constrained
III. Community/employee buyers (ESOPs, co-ops) → aligned with local stability, but underdeveloped.

Demand exists – it just does not scale.

For a prospective entrepreneur or financially aware citizen, the landscape presents a troublesome flaw: The US built a startup ecosystem – not a succession ecosystem;

1. People do not know buying a business is an option
2. Buyers & sellers cannot find each other
3. Financing is slow and exclusionary
4. There is no support after acquisition
5. Owners plan their exits too late

If done right, up to 12 million jobs will be preserved, $250 billions of local spending will be protected, while supply chains and communities will be strengthened.

If done wrong however, widespread closures and hollowed-out local economies might soon follow.

This brings up another facet of the issue: geography. It matters – a lot.

• Rural areas = highest risk, because of:
  • fewer buyers
  • weaker financing ecosystems
• Urban areas = higher absorption capacity, meaning cities recycle businesses – rural areas lose them.

Faced with all these challenges – what if Artificial Intelligence can soften the blow, if not even prevent tragedies from occuring? This is not science fiction. Rather, it is a concrete proposal to utilize emerging technologies in a productive and constructive manner. AI will not simply ‘fix’ the market – it will redefine who has the power to operate within it.

Market opacity for example, presents an AI opportunity. Given that there is no central marketplace for SMBs – and the deal flow is fragmented and hidden, AI adoption can offer:

1. Matching algorithms,
2. Marketplace aggregation, and
3. Deal discovery engines.

Additionally, financing is slow, bespoke, and manual, while high transaction costs kill deals. AI implementation can not only automate financial analysis but also risk score models and produce faster underwriting – saving precious time and effort.

The landscape is changing, however there is a lack of standardized data. Poor financial documentation and inconsistent valuation practices are serious logistical challenges. Whoever controls the data layer will control valuation – and therefore capture the transfer.

What about the new owners, coming into the picture? Currently there are buyer credibility gaps, as well as a lack of support for the post-acquisition reality. In these cases, AI can offer copilots for operators, automate workflows and create decision support systems for those in need.

That does not mean AI can have solely positive benefits. It is both a tool for concentration and a tool for democratization. It does not inherently democratize markets, rather it scales whoever deploys it best, because:

1. Platforms dominate deal flow,
2. Capital aggregates faster, and
3. Small players get priced out.

However, AI also:

1. Allows individuals to access deal flow,
2. Small acquisitions become viable, and
3. Ownership expands.

In conclusion, value does not disappear in fragmented systems – it is captured. The Great Wealth Transfer is not just a demographic event;

It is a market design failure, with AI becoming the infrastructure layer that determines who captures what.

It is quite paradoxical – there is simply too much supply (businesses for sale) and real demand (buyers), yet the system fails to connect them.

That’s exactly where the next wave of transformation – very likely AI-enabled – will happen. The transfer will occur regardless. The only question is: who is prepared to capture it.