The 'silver tsunami': What happens when millions of aging founders step away

A wave is coming. Some 3 million U.S. businesses are led by founders over the age of 55. What happens to them next is a critical question for their employees, their communities and the nation. Should the business be sold, or combined so that it can grow? Has the time come to shut it down? Can it be transitioned to employees, as described in John Abram’s wonderful book From Founder to Future? I’m having lots of productive conversations with thoughtful people about potential transitions. Of course, my advice usually involves a few new books. 

We lawyers like to be sure that anyone making important decisions is of sound mind. That’s why I really enjoyed The Invincible Brain: The Clinically Proven Plan to Age-Proof Your Brain and Stay Sharp for Life, the absorbing new book by Dr. Majid Fotuhi of Johns Hopkins’ Mind/Brain Institute. Multi-tasking business owners of all ages experience very human moments of forgetting where they placed car keys, wondering why they just entered a room, or recalling the names of people they met at a party only moments earlier. Discerning whether those experiences reflect ADHD, dementia, Alzheimer’s disease or some other neurological issue is an important first step, and according to Fotuhi, anyone can see exceptional brain improvement in a very short time. Our brains are remarkably resilient, especially when supported by targeted exercise, nutrition and sleep, and he walks the reader through case studies of patients presenting with dementia who rapidly regained substantial cognitive function by making simple but important lifestyle adjustments. Fotuhi’s practical tips and brain exercises are a must-read for any critical thinker facing important decisions.

Of course, any decision on a potential exit or transition will involve settling on terms, and for that I’d recommend Fight Less, Win More, from negotiation experts Jonathan Smith and Derek Gaunt. Every conversation, email and interaction, at home and in the office, involves some level of negotiation, and the specific words and phrases we use matter not just in getting what we want, but in building meaningful relationships. Smith and Gaunt urge the development of “tactical empathy,” a set of deep listening tools that anyone can use for high-stakes business conversations or intractable conflicts. I especially liked their “proof of life” time-saving tips for confirming that someone wants agreement and not just information. 

Explore All Events

Yet the most important conversation around transitions happens before closing and without the other side. Most business owners who care deeply about their employees will negotiate on their behalf. Will the employees be retained, receive market wages, keep health benefits, vest in a pension? One notable example of what’s possible was last year’s billion-dollar sale of Fibrebond, a Louisiana manufacturing company. The selling owners crafted a significant bonus package of about 15% of the sales proceeds, allocating some $240 million to 500-plus employees over five years. Sadly, this is more the exception than the rule.

Lower- and middle-class workers certainly aren’t seeing this kind of payday often. Indeed, about 58% of U.S. workers live paycheck to paycheck, with less than $1,000 in the bank, and often without health insurance. Texas Law professor Mechele Dickerson, author of The Middle-Class New Deal, an insightful new book on the vanishing American middle class, says business owners need to do better — a lot better — especially around non-cash benefits, and well before a sale. Dickerson presses for policymakers to work with private companies on healthcare and retirement solutions to sustain and grow the middle class. Dickerson’s historical framing of these stubborn and urgent problems is revelatory and important, especially now. 

Even in volatile times, many business owners remain steadily focused on maintaining operations, retaining employees, and meeting investor and lender expectations. For those who have been doing this for a long while, including through the Great Recession and the decade beyond, that now means making strategic near-term plans.

Read in the Boston Business Journal

Larry Gennari is a business lawyer and chief curator of Authors & Innovators, an annual business book and ideas festival. Watch recent interviews with authors here. Gennari also teaches Project Entrepreneur, a business fundamentals bootcamp for returning citizens, at BC Law School.