What is the silver transition and how is it reshaping business succession planning?

A profound demographic shift is underway. As the baby boomer generation retires, companies around the world are preparing for a change of ownership. In the US alone, an estimated $84 trillion will be transferred to the next generation by 2045 – the so-called silver transition. Much of this wealth will be tied up in businesses since half of all private companies in the US are owned by people approaching retirement.

Succession in business is not a new issue but the current scale of the challenge is unprecedented. And when family succession plans fall apart, it typically ends in closure or a takeover by private equity or larger competitors. What is lost then is not only a business, but a layer of independent enterprises that provide jobs, preserve knowledge, power communities and foster long-term innovation. It’s a loss for the individual business owners and their stakeholders, but also for society.

How business succession is addressed during this silver transition will shape the future of these individual companies and, more importantly, the wider economy.

More than a century ago, Robert Bosch, founder of the Bosch Group, a German technology and engineering company, faced the succession question. For him, company ownership was about entrepreneurial freedom, the protection of corporate values and ensuring that the most capable leaders would always be in charge.

Bosch’s concerns probably resonate with a lot of entrepreneurs today. With fewer independent companies and more corporate ownership concentrated in the hands of a small number of actors, control and decision-making can become increasingly concentrated.

In the US, for example, stock market concentration is already at a record high and just three asset managers hold the largest stake in nearly 40% of public companies. This weakens competition, which is the central mechanism driving market efficiency, innovation and customer benefit.

The silver transition goes beyond a generational challenge, it presents a structural challenge for economies that depend on a vibrant and diverse base of independent enterprises. Like Bosch, many retiring business leaders today are searching for ways to preserve business independence, safeguard purpose-orientation and ensure continuity.

One alternative is steward-ownership.

In steward-owned businesses, money (economic rights) is decoupled from power (voting rights), ensuring the company remains purpose-oriented and self-determined in the long run. Rather than passing control through inheritance or buyouts, the model allows control over a company to be passed on to people closely connected to it – stewards instead of absentee owners.

At the same time, shareholders can’t extract unlimited value or profits from the company. Profits are instead treated as means to a purpose. They are reinvested, donated or used to cover capital costs. Under steward-ownership models, these principles are legally enshrined in the ownership structure of the company.

By changing a company’s core incentives, steward-ownership ensures that businesses remain purpose-oriented and independent. It shields them from hostile takeovers and creates an environment where decisions can be made to further the company’s purpose.

This contrasts with traditional corporate structures, which typically combine voting power and economic rights in the hands of shareholders. This can create pressure to prioritize short-term financial returns and shareholder value even when it may conflict with the company’s broader purpose or stakeholder interests.

Steward-ownership can expand the pool of potential successors by opening the role of steward-owner to those beyond family members or wealthy buyers. In a time of succession challenges, this makes the model an essential tool for securing the continued existence of independent companies for the next generation.

Bosch used the steward-ownership approach to separate power and money in a trust-foundation model that thrives to this day. More recently, Patagonia attracted global attention when founder Yvon Chouinard and his family placed the clothing company into a steward-ownership structure. This was designed to ensure Patagonia’s purpose would not be compromised by shareholder value pressures. As Chouinard says, rather than "going public", Patagonia is "going purpose".

Across industries and countries, other business owners are exploring the steward-ownership model to secure succession while safeguarding the independence and purpose-orientation of their companies. Examples range from corporations like German optics tech company Zeiss and Danish pharma Novo Nordisk, to modern innovators like Ecosia, Europe’s largest independent search engine, the private messenger app Signal and open-source browser Mozilla Firefox.

The model also resonates with startups and smaller businesses. Take Sahaas Zero Waste, a Bangalore-based waste management company offering holistic waste management solutions across India. Its 420-plus team handles more than 100 metric tons of waste every day, helping to support the circular economy in India. But founder Wilma Rodrigues believes the business model for circular systems is still too fragile. Transitioning mindsets and practices that have been entrenched for centuries takes time.

This is time Rodrigues doesn’t have, however, as she nears retirement and so she is exploring steward-ownership as a way to ensure that Saahas can continue building a business model for resource recovery that will bring scale to the transition towards a circular economy. Steward-ownership could help to secure the long-term thinking she founded her business on, while creating a path for Rodrigues to hand over the reins to the next generation.

As the silver transition reshapes the business landscape, new ownership models will be key to backing the next generation of durable, mission-led enterprises.

Rather than repeating the same ownership and financing models, there is both room and demand for alternative company models to emerge and to be adopted to strengthen the diverse, dynamic and decentralised market economy.

As Patagonia Chair Charles Conn has said about the company’s own silver transition: "It’s the future of business if we want to build a better world for our children and all other creatures."