Key facts
- Many U.S. business owners are selling their companies to their employees as they plan for retirement.
- Employee-owned companies are noted for increased productivity, job retention, and higher wages.
- Up to 600 U.S. firms are reportedly sold to workers annually, with financing options increasing.
- Employee Ownership Trusts (EOTs) and Employee Stock Ownership Plans (ESOPs) are key mechanisms for these transitions.
- A significant wave of ownership transitions is expected as 'baby boomer' owners retire by 2035.
A growing number of U.S. business owners are opting to sell their companies to their employees as they approach retirement, a trend driven by a desire to preserve company culture and local jobs. This shift is particularly notable among 'baby boomer' entrepreneurs who will retire in large numbers over the next decade.
Tricia Salcido, 56, sold her shoemaking business, Softstar Shoes in Oregon, to its 30 employees in January. She is staying on as CFO and has noted increased employee engagement and idea generation since the transition. Salcido chose employee ownership to prevent her firm's artisan shoemaking from being moved out of the U.S. by a cost-cutting corporate buyer.
Research suggests employee-owned companies can be more productive, less likely to make staff redundant, and offer higher wages. A 2025 study indicates up to 600 U.S. firms are sold to their workers annually, with financing options for such deals increasing significantly. Experts like Ethan Rouen from Harvard Business School note that many owners are looking to sell, with adult children often uninterested in taking over.
William Stockwell, whose great-grandfather started Stockwell Elastomerics in 1919, also sold his Philadelphia-based manufacturing business to employees. He was motivated by seeing other firms suffer under new ownership. Both Salcido and Stockwell are accepting payments over time, indicating a willingness to take on financial risk for the sake of a smooth transition.
Common methods for employee buyouts include Employee Ownership Trusts (EOTs), where a trust owns the business on behalf of staff, and Employee Stock Ownership Plans (ESOPs), where employees receive shares. In 2023, over 6,600 U.S. companies were structured as ESOPs, employing nearly 11 million people and holding over $2 trillion in assets. Worker cooperatives are another option.
While these schemes can be complex to set up and involve a longer wait for payment for the owner, they are seen as a way to democratize capital ownership, appealing to both older founders and younger workers disillusioned with traditional corporate structures. Awareness of these schemes remains a challenge, but government initiatives like the U.S. Department of Labor's Employee Ownership Initiative and bipartisan support in Congress aim to simplify and promote the process.