Khaled Abu-Suud
Khaled Abu-Suud

A major transition is taking place across the U.S. small-business landscape as millions of longtime owners approach retirement. Despite anchoring local economies and supplying essential services, many of these companies typically fall outside the focus of large institutional investors, and without sophisticated succession planning. As a result, a broad generational hand-off is beginning, one that will require new owners and operators to step in and steward these firms through their next chapters.

Interpreting this shift from the inside is Khaled Abu-Suud, co-founder and investment partner at Kodiak, a firm dedicated to supporting entrepreneurs acquiring businesses from retiring owner‑operators.

His experience offers a clear view of the scale and nuance of this transition. Rather than a shortage of capable buyers, Khaled sees an increasingly motivated and well-prepared cohort of emerging entrepreneurs (often younger operators seeking to run real businesses) now engaging with the retiring generation. The gap, he argues, is less about talent scarcity and more about creating the right structures, transaction frameworks, and support systems that enable these transitions to succeed.

A Generational Turning Point for American Small Businesses

A generation of baby-boomer owners is approaching retirement, and the businesses they built now sit at a transition point. Many operate in essential, cash-flowing sectors where stability has long depended on founders who are beginning to step back from day-to-day operations. With few formal succession plans in place, the market is entering a period in which ownership will inevitably change hands, regardless of how prepared individual firms may be.

This turning tide only grows with each year. According to the U.S. Small Business Administration, roughly 2.3 million small businesses are owned by individuals aged 55 or older, a cohort now moving toward retirement at an accelerating pace.

While Kodiak's pipeline isn't a proxy for the whole economy, it gives Khaled and his partners a close-up view of how these transitions tend to unfold: long-established companies led by owners ready to step back, and a rising set of entrepreneurial buyers who are exploring small-business ownership as a career path. For him, the friction isn't defined by a simple shortage of successors. Instead, it reflects the structural challenges, from incomplete handoff planning to underdeveloped systems, that make these generational transfers complex for both sides.

As he puts it, "There's this massive wave of retiring owners because of fundamental demographic imbalances that are systemic across many Western economies. The real challenge is ensuring the next generation of operators has the support and structure to step in successfully."

Where Kodiak Finds Value in Overlooked, Under-Prepared Firms

Kodiak evaluates numerous new deals a week and consistently sees the same challenges during ownership transitions: patchy financial records, outdated systems, limited reporting, and minimal technology adoption. These issues often obscure a company's underlying quality, depress valuations, and widen the gap between what a buyer can underwrite today and the long-term potential once the firm is professionalized.

Across its first twelve warehoused investments, Kodiak has focused on operators who are focused on professionalizing firms with strong fundamentals but limited institutional structure. Many of these companies benefit from local defensibility, regulatory positioning, and entrenched, repeat business, all advantages that, Khaled points out, may become significantly more valuable once basic systems are modernized and operational improvements are introduced.

Kodiak's strategy centers on selecting businesses with clear strengths: steady demand, well-defined handoff conditions, and meaningful room for operational improvement. These foundations allow the firm to support operators as they transition into ownership and to position the companies for broader buyer interest in the future.

"What we observe across transactions appears to be consistent: the right operator, paired with the right structure, can unlock opportunities that aren't obvious from the outside," Khaled notes.

The ETA Model and Its Place in Today's Industrial Trends

Kodiak's approach is rooted in the entrepreneurship-through-acquisition (ETA) model, in which entrepreneurs purchase established small businesses from retiring owners and step in as the new operators. The firm focuses on essential, resilient companies with reliable cash flow—businesses well-suited for thoughtful transitions and disciplined long-term stewardship.

Khaled believes that ETA is emerging at a particularly distinctive moment in the American industrial landscape. Demand for power, infrastructure upgrades, and reshoring are secular in nature and will likely be key drivers of the economy for decades to come. Trends like the energy requirements of AI data centers, ongoing grid modernization, and industrial automation are well addressed by thousands of long-standing small businesses, who have developed deep technical expertise, trusted local relationships, and decades of institutional knowledge.

These structural forces provide stable baselines, which should leave meaningful upside for operators to modernize and improve legacy businesses.

He underlines that, against this backdrop, the role of the operator becomes pivotal. Many retiring owners maintained stable and profitable companies but did not prioritize technology upgrades, commercial initiatives, or professionalized processes. When a capable buyer introduces better systems, disciplined management, and a clear growth strategy, these legacy businesses can shift trajectory quickly.

Khaled believes that the strength of the operator ultimately determines the strength of the investment. Those with strategic clarity tend to conduct more rigorous diligence, negotiate stronger transaction structures, and execute more effectively during the first years of ownership. Their ability to identify and pull key value levers, pricing, procurement, capacity utilization, or improved service mix, directly shapes outcomes.

As Khaled puts it, "These are good businesses that could be great—but many have latent growth opportunities that retiring owners simply aren't willing to pursue. We believe these businesses have an opportunity to unlock the engines of growth."

A Way Forward for New Business Owners

Khaled sees Kodiak advancing alongside a broader shift in the ETA landscape, where more entrepreneurs begin to explore business ownership through acquisition and more companies enter a permanent generational transition. As the firm evaluates new sectors and supports a growing pool of operators, he envisions that ETA will move beyond a niche corner of private markets.

The next step, he argues, is deeper institutionalization: faster underwriting, clearer standards, and more robust support models for first-time operators. As he explains, "America is uniquely conducive to people who are entrepreneurial. It means this ecosystem can be far more structured and scalable in the U.S. because the entire model relies on individuals stepping into ownership."

If this direction holds, Kodiak expects ETA may become one of the most accessible pathways for the next generation of operators to step into business ownership. With so much value poised to change hands in the coming decade, firms like Kodiak, designed to guide these transitions, aim to demonstrate how this shift can be scaled thoughtfully and sustainably.

Disclosures:

This article is provided for informational and background purposes only and is intended to describe the professional experience, leadership approach, and general investment philosophy of Kodiak and its leadership team. It does not constitute an offer to sell or a solicitation of an offer to buy any securities or investment advisory services.

The views expressed are general in nature and should not be relied upon as investment advice. Investment strategies and processes involve risk and do not guarantee future results.

References to Kodiak are for background purposes only. Kodiak intends to become a relying adviser of Eight Partners VC, LLC, which is a registered investment adviser, and the activities described may not reflect current or future advisory services.