It’s not just the Murdochs or the Arnaults. As family businesses change hands, new data shows that more American companies are now being inherited than purchased, part of the broader Great Wealth Transfer that marks a shift in the way the next generation could shape the economy.
Bank of AmericaIs new Private banking study of wealthy Americans found that the share of companies inherited by wealthy Americans is expected to reach 23% in 2026, up from 11% purchased, a departure from the previous pattern in which more companies were purchased than inherited. For example, according to BofA data, in 2022, 28% of companies were purchased compared to 5% that were inherited. Researchers surveyed 1,400 U.S. adults with at least $3 million in investable assets, specifically examining how high-net-worth individuals save and pass on their wealth.
Of course, this is all part of what is called that today Great wealth transferthe projected inheritance of between 36 trillion dollars And 124 trillion dollars over the next two decades in assets from baby boomers to younger generations. Wealthy individuals play an outsized role in this transfer because wealth accumulation is highly concentrated upward. The enormous wealth that moves across generations raises the question of how the economy is shaped by the young and the rich. Jonathan Parker, a professor of financial economics at the MIT Sloan School of Management, said that the way assets – in this case, companies – change hands can sometimes reveal broader economic patterns.
What do more inherited companies say about the economy?
For Parker, a larger share of inherited businesses was a sign of even greater concentration of wealth, a phenomenon that has gained attention amid growing concerns about affordability and affordability K-shaped economyin which the rich continue to accumulate wealth while the poor struggle to make ends meet. According to the Federal Reserve Bank of St. Louis, the top 1% of U.S. households They account for almost a third of the country’s wealthThat’s about $44 trillion, or as much as the bottom 90% of American households.
“We have a lot of startups in the U.S.,” Parker said Assets. “This is generally a very good thing, and of course this leads to wealth distribution being highest among those owners who have a lot of resources. An interesting question for the future is: What proportion of this wealth do people leave to their loved ones at the end of their lives?”
Parker found that for decades there had been an inverse pattern between wealth and the number of children, with wealthier people having fewer children. A cycle has emerged during the Industrial Revolutionalthough economists have done so struggled to come to a final conclusion why that is so. While now there may also be one collapse of this trend Parker argues that in some parts of the world, where wealthier people are starting to have more children, wealth is less distributed in a family with one child than in a family with six.
The increase in inherited companies could also be part of the trend of companies staying private longer because it is harder to capitalize on private companies. Apollo Chief economist Torsten Slok quoted economist and “Mr. IPO” Jay Ritter a Increase in average age to the company going public since 2022, when the Federal Reserve began raising interest rates. This trend coincided with a Private capital boomallowing larger companies to raise billions through venture capital funding and private equity rather than public markets.
What questions are more inherited companies raising?
While wealthier Americans who inherit businesses follow economic trends of wealth concentration and the longer lifespan of private companies, Parker noted that other factors could influence this pattern.
“We have a very strange situation right now” when it comes to inheritance taxation, he said. Over the past 25 years, the United States has fundamentally overhauled its federal estate tax, most recently Increase in exemption to $15 million per person under the One Big Beautiful Bill Act. At the same time, the US has retained the capital gains tax basis increase at death, a provision that eliminates capital gains tax on an increase in the value of an asset that occurred during the lifetime of the original owner of that asset.
“It’s kind of like a tax benefit, giving away taxes to people who pass them on to heirs, rather than the other way around,” Parker said.
The current tax system could further incentivize wealthy Americans to hold on to their assets longer before passing them on, extending the Great Wealth Transfer to some extent but maximizing gains for the next generation of heirs. While BofA did not provide specific data on how long the original owners held on to their companies and other assets, the report said a “significant portion” of business owners had no plans to exit their companies and the majority had plans to ultimately transfer or sell ownership to family heirs.
“That may be part of the reason why people hold on to these companies longer and then pass them on to heirs,” Parker said. “And the heirs can then either make them public or sell them or keep them.”