Summary
For owners of closely held businesses, choosing how to sell their company can be one of the most important decisions they will ever make. Most pursue familiar exit paths, such as a private equity buyout or a transfer to family members. But a small number will choose a different route: selling the business to their own employees.
Why do some business owners take this less-traveled path? What financial, practical, and personal considerations lead them to choose employee ownership—an option that remains relatively uncommon in the United States? To answer these questions, we went directly to the source: the business sellers themselves.
This report is based on in-depth interviews with 23 business owners who transitioned ownership of their companies to their employees—most through an Employee Stock Ownership Plan (ESOP), and some through alternative arrangements. They share, in their own words, what motivated them to do so, what they learned along the way, and what they wish they had known at the outset. Together, their reflections offer a rare window into the decision-making processes that lead business owners to choose employee ownership.
This report was written by the Institute for the Study of Employee Ownership and Profit Sharing with support from MetLife Foundation.