As a wave of baby boomer small business owners approaches retirement across the United States, a quiet but transformative shift is gaining traction: instead of selling their life’s work to outside corporate or private equity buyers, a growing number of owners are transferring full ownership to their employees. This growing trend not only addresses the coming “silver tsunami” of generational business transitions but also delivers tangible benefits for workers, companies and local economies, proponents argue.
One early adopter of this model is Softstar Shoes, an Oregon-based artisan shoemaker with 30 employees. The business completed its employee ownership transition in January 2026, when former sole owner and CEO Tricia Salcido, 56, sold the firm to her workforce to prepare for retirement. Salcido, who will stay on for the next few years as chief financial officer, says the transition has already unlocked a new level of team engagement that was absent under her sole ownership. “I’m getting personal emails from employees saying, ‘well, have you thought about this idea?’” she explained. “These are business insights that weren’t forthcoming before!” For Salcido, the decision was also personal: she wanted to protect local jobs and keep her company’s craft shoemaking operations in the U.S., a outcome she was convinced would not happen under a cost-cutting outside buyer.
Salcido is far from alone. Data from a 2025 industry study shows as many as 600 U.S. firms are now sold to their workforces each year, and available financing for these deals jumped 78% from $500 million in 2024 to $865 million in 2025 — a clear signal that the transition to employee ownership is accelerating. The scale of demand for this model is easy to understand: a 2026 report from global business consulting firm McKinsey estimates that roughly 6 million small and medium-sized U.S. companies, owned by baby boomers, will change hands between now and 2035 as this generation exits the workforce. Harvard Business School associate professor Ethan Rouen notes that demand for exit strategies is already pervasive, and most founders cannot pass their businesses to family: “I don’t think a week goes by where I don’t talk to an owner who is looking to sell their business. Their grown-up children often aren’t interested in taking on the family venture.”
Multiple case studies and research papers confirm that employee-owned firms outperform traditional ownership structures on key metrics. When employees share both the risks and rewards of business ownership, they become far more motivated, leading to higher overall productivity. Employee-owned firms also are less likely to conduct mass layoffs during economic downturns and consistently pay higher average wages than externally owned competitors.
Another business owner who chose employee ownership to protect his company’s legacy is William Stockwell, whose family has owned Philadelphia-based industrial component manufacturer Stockwell Elastomerics since it was founded by his great-grandfather in 1919. After observing the disruption that followed outside buyouts of similar firms, Stockwell decided to sell to his employees. “The new [outside] ownership might move the business, they might shut it down, or drastically change it in other ways, and the people remaining are stuck,” he said. Today, Stockwell works part-time at the firm he sold to staff.
Three main employee ownership models are currently used in the U.S. The most popular structure is the Employee Stock Ownership Plan (ESOP), which held $2 trillion in combined assets across 6,609 U.S. firms employing 10.9 million Americans as of 2023, the most recent year for full data. Under an ESOP, the company is held in a trust for employees, who earn shares that they can cash out only when they leave the company. The second model, which Softstar Shoes used, is the Employee Ownership Trust (EOT). Under an EOT, a trust holds ownership on behalf of staff, eliminating the need for employees to purchase shares out of their own pockets. The trust pays the former owner in installments drawn from future annual profits, meaning the former owner carries risk and must wait for full payment, but employees receive a share of profits each year. The third model is the worker cooperative, where employees buy individual shares of the business directly.
The trend extends beyond legacy family firms. Proponents note that employee ownership also appeals to younger workers disillusioned by the inequality and rigid hierarchy of traditional corporate structures. “The only way to truly create wealth in this country is through ownership of capital. And this is a way to democratise that,” Rouen explained.
Despite the benefits, the model still faces significant barriers. Setting up EOT and ESOP structures is far more administratively complex than a straightforward sale to an outside buyer. Many owners are also discouraged by the requirement to wait years for full payment and accept financial risk tied to the company’s future performance. Most importantly, widespread lack of awareness about employee ownership schemes slows adoption: “No one’s heard of them,” Salcido says.
Still, the outlook for growth is positive, insiders say. 71-year-old Paul Silvis, who is currently in the process of selling his central Pennsylvania manufacturing firm SilkoTek Corporation to his employees, says he has full confidence in the decision. “I’m getting ready to ride off into the sunset at some point,” he says. Stockwell, who has already completed his transition, advises owners considering the move to plan years in advance, saying “It’s not something you want to begin the year you want to retire.”
In recent years, the U.S. federal government has moved to support employee ownership, with bipartisan backing in Congress and a new Employee Ownership Initiative launched by the Department of Labor to promote the model and provide guidance for interested owners. As policy support grows and the wave of generational business transitions accelerates, Rouen predicts more businesses will make the switch: “my hunch is that we will see more successful employee ownership conversions in the next few years.”