Q&A … With Dan Heiman

PUBLISHED JULY 2025

Q: We’re more than halfway through Baby Boomers who have reached retirement age; how has that changed business-succession dynamics?
A: I’ve seen much of this play out in my practice and experience over the past 20 years. We have 10,000 people reaching age 65 every day in the U.S., so there’s an urgency, I think, for businesses to have a succession plan in place. There is an unprecedented volume of business owners looking to exit and the problem is there aren’t enough readily available successors. Either A) they haven’t brought someone in to be a successor, or B) other members of the family don’t want anything to do with the business. We’ve seen a lot of that, where it might be a great business, but the kids don’t want to do what Dad or Mom did because it was hard work to run a business, especially in industries like manufacturing.

Q: Why manufacturing?
A: To start, 75 percent of U.S. manufacturing firms are privately held and owned by Baby Boomers and 60 percent have no succession plan in place. Heavy manufacturing is hard, especially for young Millennials and Gen-Z who either don’t understand the business or just say “I didn’t sign up for that” and don’t want to get their hands dirty. This has created a tremendous talent gap. Many of these businesses are capital intensive and have specialized processes making these companies hard to sell without internal knowledge transfer.

Q: Is that fertile ground for buyers?
A: There is a sell-off going on with regard to Boomer businesses; they’re looking to cash out, but the buyer leverage is increasing because there are so many of these small to middle-market manufacturers out there that are not well-prepared for the change or haven’t done the work to differentiate their business as an attractive acquisition. That creates a real squeeze for the seller.

Q: Are bigger, more sophisticated businesses better prepared?
A: In most cases, yes. I think we’re seeing a lot of strategic buyers looking to roll-up and expand similar businesses under one umbrella where they can gain economies. Some of these buyers are very smart business people and they can make out like bandits if done properly. That’s often when we get called—when a strategic buyer or private equity firm comes in to buy a $10 million or $15 million business that was being run by the founder, and after it’s sold, they typically need a new CEO, president or GM and sometimes a new CFO to run the business.

Q: Beyond demographics, how’s the depth of the incoming talent pool?
A: It’s both … there aren’t enough up-and-coming leaders to fill all of the Baby Boomer vacancies that have come and are coming rapidly. That’s why companies call us. I use the analogy of musical chairs a lot, only in this case, the companies are the chairs, and there just aren’t enough players to fill all the seats when the music stops. A lot of sellers have to find somebody like us to recruit someone who is doing the job somewhere else. That’s the reality of what we often see in our practice.

Q: Does bringing in new leadership create a clash of competencies?
A: I think there is a shift toward companies wanting more professional management. The owner ran this thing for years and did things because they’d always done them that way, but it’s often not the best or most efficient way to operate. Professional managers understand metrics, data and how to run a business efficiently and effectively. These modern-day C-level execs are in demand and bring a lot to the table. We’ve seen that happen many times, bringing in professional management, turning things around and making it more efficient or profitable. Having non-family executives, that’s increasing too, particularly if owners can’t sell when they want to. A lot of our clients are family owned, and the good ones have done the  preparation, so the business can continue to run, it’s profitable, and the family can sit back and serve on the board and let professional managers go do what they do and they can often earn a better return on their investment without the day to day headaches.

Q: What’s the common denominator among owners that are waiting too long?
A: I’ve heard the stories of “the owner that just won’t give it up”. I’ve even seen that within my own legacy family business, where the owners are so busy with the day-to-day, they haven’t spent any time developing the transition plan and they are stuck. In my own business, we’re small and I’m 57, but we’re already in the process of thinking about our transition, looking at what someone will want to buy. Buyers are looking for businesses that are running efficiently and effectively that don’t depend fully on the founder. They want seasoned staff, with managers who know the numbers, the metrics and how to go about getting more business. Every business is different in terms of what they measure and how they produce things, but at the end of the day, if a firm comes in to buy the business and the owners don’t know the financials or the key metrics that drive the business, or even how to get more business in the door, it means they’re unprepared, and most likely there won’t be a buyer. We are starting to see a rise of non-family executive hires and outside boards to professionalize operations. And more families who own successful businesses are now using structured governance systems, like family councils and succession charters.

Q: There’s often a significant cost to owners who have delayed this whole process, isn’t there?
A: There are a lot of those folks who hang on well into their 70s that might eventually find somebody they want to come into the business, or they manage some kind of managerial buyout if they are lucky. But if they didn’t maximize their time and effort in the sale or transition of the business by cashing out earlier or doing an ESOP where they can pass it on and leave a legacy, it probably costs them in the end and their legacy may evaporate altogether. Again, there just aren’t enough people who are at the right stage and level of life to take over for someone who has been running a business for 30 or 40 years unless business owners are intentional about the process of selling and start the process early to find the right succession plan.

Q: What about the psychological side to selling off your company?
A: Often times, it is an emotional or legacy concern that may not be worth much to a new buyer: The founder is saying “This is my baby, I created and built this business from the ground up over many years and it’s worth X.” That can complicate things because they may perceive the business to be worth more than the market will justify. Because the buyer is usually staying away from the emotional aspects and looking at the business value based on the numbers and perhaps some good will in the market, but they have no emotional investment. There is a power struggle back and forth on what the owner thinks it’s worth, and what it’s really worth. That happens quite a bit.

Q: You search for executive talent nationwide; is it any tougher to bring the right fit candidates into this market?
A: I do think the central part of the U.S. can be hard to recruit to unless there is a family connection or some other connection to the region. However, we have recruited dozens of leaders to KC that don’t, and often they find Kansas City or the Midwest far more livable than they expected. They find it affordable with competitive wages, we have great schools, much shorter commute time and all of this makes people want to stay. The central U.S. also tends to have a lot more privately held businesses. Look at Minneapolis as an example, they have about 20 Fortune 500 headquarters; Kansas City has two. It’s a very different landscape. So the majority of our businesses are privately held, family owned or PE-backed. On top of that, we are manufacturing heavy. About 75 percent of U.S. manufacturing firms, for example, are privately held and owned by Baby Boomers, (National Center for Middle Market). And 60 percent have no succession plan in place. 

Q: And our regional attributes?
A: To get back to your question about recruiting people to the Kansas City area, it depends on the opportunity, obviously. Since COVID, most people think they can do these jobs remotely. I don’t know if that approach has worked very well. With a corporate leader, in particular, you need a team where people are together and able to talk and interact regularly. I’m not saying it doesn’t work, but getting people to move now is really hard, whether it’s a new CEO or head of sales, CFO or head HR. High interest rates, uncertainty in the economy, unfamiliarity with this area—all of these factors are making it more challenging and harder to find the right talent. Often our clients have a unique position to fill, and if they want to find someone working in a business that’s similar, they’re often not right here in KC—the have to go outside the market, and that can mean paying a relocation bonus or some sort of enticement bonus to get them to move. And often requires help from a recruiting firm like ours to go find their unique talent. 

Q: You mentioned manufacturing earlier. Are there other sectors where finding the right fit is tougher?
A: We do financial-services work as well. For example, 40 percent of the nation’s financial advisers are 55-plus in age; the average age of a principal at those firms is 59. That’s going to be a problem if they don’t have successors or plan well for a transition. That’s probably why we are seeing so many transactions at places like (wealth-management firms) Creative Planning and Mariner who are rolling up firms that are aging out. Another example, over one-third of accountants are expected to retire by 2030. There simply are not enough accountants and kids at four-year colleges are not choosing accounting as a major because of the increasingly complex tax laws and regulations and the time commitment for getting a master’s degree or CPA. It’s really hard, and that’s making it more challenging to find good financial successors.

Q: Sounds as though being in your space is a good place to be?
A: I may be skewed, but I do see my industry as being very much in demand over the next 10-15 years. Across all sectors, whether manufacturing, financial services, professional services, agriculture—there are just massive numbers of people aging out. There’s going to be a gap between them and succeeding generations that may not have the same work ethic or interests. A lot of those in the next generation have certain preferences and desire for a work life balance: “I’ve seen my parents or grandparents work hard their whole lives and miss out on things.” These folks want balance and social impact in their work, they want the tech, all of that, but it’s a bit of a clash sometimes. It will be interesting to see if the new generations’ work-life, social and tech desires marry up with the hard-working, more blue-collar type of work that went into building the legacy businesses in our communities.