As more Korean American baby boomer business owners reach their retirement age, a growing number of them are shutting down their businesses without a succession plan, raising concerns about a looming succession crisis in the community.
A wave of small, family-owned businesses—including restaurants, laundromats, beauty salons, retail stores, and motels—are disappearing from Korean enclaves. Many of these were founded by first-generation Korean American immigrants and operated for decades as community cornerstones.
However, the lack of structured planning is leaving many owners with no viable exit strategy.
Retirement without transition
According to a 2023 Korea Daily survey, the percentage of business owners in the Korean American community fell below 20% (19.6%), while the share of retirees rose to 17.6%, suggesting a demographic shift with few successors in place.
Yong Kwon, a certified public accountant (CPA) with LEK Partners, a firm specializing in mergers and acquisitions (M&A) and retirement planning, noted that many first-generation owners are closing down or selling at a loss. “The aging business owner population is entering retirement, but many are doing so without preparation,” he said.
One key factor is the younger generation’s reluctance to take over family-run operations. Many second-generation children prefer careers in professional fields or corporations. In some cases, parents themselves are hesitant to pass down what they consider difficult or labor-intensive work.
A recent survey of minority business owners found that only 17.3% intended to transfer ownership of their business to their children after retirement.
Shutdowns outpace succession
Succession is especially rare among small businesses, which often lack scale or profitability to attract outside buyers. Owners unable to sell frequently opt for closure, even at financial or emotional cost.
Because many small businesses struggle to secure a buyer or receive a fair valuation, closures are often seen as the only feasible exit. The psychological burden of winding down operations adds to the challenge.
Still, some success stories exist. A leading example is H Mart, the nation’s largest Asian supermarket chain. Founder Il Yeon Kwon began a planned succession process early, bringing his children into leadership roles. The company now operates more than 100 stores nationwide.
Other owners turn to third-party sales to realize retirement plans. M&A deals allow businesses to continue under new leadership while helping the founder secure financial security.
Experts recommend that business owners begin succession planning three to five years before retirement. If children are uninterested, external succession—including sale, merger, or transition to new management—should be considered.
“A tailored exit strategy aligned with retirement goals must be a top priority,” said Kwon. “To achieve a smooth transition, Korean American baby boomer entrepreneurs should consult tax, legal, and valuation experts to map out sustainable succession plans.”
BY HOONSIK WOO [woo.hoonsik@koreadaily.com]
