As more US business owners retire many are selling up to their staff

US Business Owners Transition to Employee Ownership Amid Retirement Trends

As more US business owners retire, a growing number are choosing to sell their companies to their employees, marking a significant shift in how small businesses are managed. This trend is evident in places like Oregon, where Softstar Shoes recently became employee-owned in January. The move was driven by its former sole proprietor, Tricia Salcido, who, at 56, is preparing for retirement. By transitioning ownership to her 30-member workforce, she aims to preserve the company’s values while allowing her team to take charge. Salcido will remain as chief financial officer, keeping an eye on how her staff’s leadership impacts the company’s trajectory. “I’m receiving personal emails from staff suggesting ways to improve operations,” she explains. These insights, she notes, were previously absent from the company’s decision-making process.

Employee Ownership Gains Momentum

The decision by US business owners to sell to employees is part of a broader movement, with the number of such transactions rising sharply. According to a 2025 study, approximately 600 U.S. firms are transferred to employees annually, a figure that has increased by nearly 78% since 2023. This surge in investment is reflected in the $865 million allocated to employee ownership deals in 2024, compared to $500 million the prior year. The trend benefits both businesses and workers, as research highlights that employee-owned companies often exhibit higher productivity, reduced layoffs, and better wages. For US business owners, this transition not only ensures continuity but also aligns their legacy with the people who sustain it.

“I carry the risk, in that if anything happens, I don’t get paid,” says Salcido, who now relies on her team’s performance for financial returns.

This sentiment underscores the shift in risk distribution and the trust placed in employees. The change also means that US business owners are no longer the sole decision-makers, fostering a collaborative environment that can drive innovation and long-term stability.

Preserving Local Jobs and Craftsmanship

For US business owners like Salcido, selling to employees is a strategic move to protect local jobs and uphold the artisanal legacy of their businesses. She fears that a corporate buyer might relocate operations or alter the business model, potentially eroding the craftsmanship that defines Softstar Shoes. This concern is shared by many entrepreneurs, especially those in the baby boomer generation, who own about six million small and medium-sized companies. As more US business owners retire, the impending wave of ownership changes has been dubbed a “silver tsunami” by analysts, highlighting the massive impact on the economy and workforce.

“Most small business owners really care,” says Ethan Rouen, an associate professor at Harvard Business School. “They’re looking for ways to ensure their vision lives on.”

Rouen’s comments reflect a deeper motivation: the desire to leave a lasting legacy. By transitioning ownership, US business owners are not only securing the future of their companies but also empowering their employees to carry forward their values.

Ownership Transition Models and Their Implications

Various frameworks enable employees to acquire company ownership, each tailored to different business needs. Softstar Shoes used an Employee Ownership Trust (EOT), which holds the business on behalf of staff. This model allows employees to share in profits without upfront payment, with Salcido receiving installments tied to future earnings. In contrast, William Stockwell of Stockwell Elastomerics, a Philadelphia-based manufacturer, opted for an Employee Stock Ownership Plan (ESOP). Employees receive shares that can be cashed in upon leaving the company, with Stockwell accepting payments over a decade. These models demonstrate how US business owners are adapting to ensure sustainable transitions.

As more US business owners retire, the choice of ownership model becomes critical. EOTs and ESOPs are popular, but other options like buyouts, partnerships, or selling to family members are also common. Each method has its pros and cons, but the shared goal is to maintain operational continuity and employee morale. Analysts note that this trend is particularly pronounced in industries reliant on skilled labor, such as manufacturing and retail, where employees are deeply invested in the company’s success.

Employers in such businesses often report increased loyalty and productivity after transitioning to employee ownership. A 2024 survey found that companies with employee-owned structures had a 25% higher retention rate and 18% better employee satisfaction scores. These statistics support the argument that US business owners are not just passing the baton but also enhancing the workplace culture. For many, this is a win-win scenario, blending financial security with personal fulfillment.

Challenges and Opportunities in the Transition

While the shift to employee ownership presents many benefits, it also comes with challenges. US business owners must navigate legal and financial complexities, ensuring the transition aligns with their long-term goals. For instance, the sale of Softstar Shoes required careful planning to distribute shares fairly and maintain the company’s vision. Additionally, some owners express concerns about losing control over strategic decisions, even though they remain involved in financial oversight. Despite these hurdles, the trend shows no signs of slowing, with more US business owners embracing the idea of shared leadership.

As more US business owners retire, the role of employee ownership is becoming increasingly vital. It not only addresses the challenge of succession planning but also strengthens the bond between management and staff. Experts predict that by 2035, this transition will affect millions of small and medium-sized enterprises, reshaping the landscape of American business. With the right support and planning, US business owners can ensure their companies thrive long after they step down, creating a legacy of shared success.