A substantial wave of ownership transitions is anticipated across the United States as an estimated six million owners of small and medium-sized businesses prepare for retirement between now and 2035. This demographic shift, dubbed a 'silver tsunami' by some commentators, is leading many entrepreneurs to consider alternative succession plans, with a notable increase in businesses being sold to their employees.
This trend is exemplified by companies like Softstar Shoes in Oregon, where the former owner, Tricia Salcido, decided to sell her business to its 30-strong workforce as she approached retirement planning at age 56. Salcido, who will remain as chief financial officer for a transitional period, noted a significant uplift in employee engagement and innovative suggestions for business operations since the change in ownership. This sentiment is echoed by research suggesting that employee-owned firms tend to be more productive, less prone to redundancies, and often offer higher wages.
The motivation behind such sales often extends beyond financial considerations. For owners like Salcido, preserving local jobs and maintaining the unique craft of their business were key factors, fearing that an external corporate buyer might prioritise cost-cutting over these values. Similarly, William Stockwell, whose family business Stockwell Elastomerics dates back to 1919, chose employee ownership to safeguard the company's future and prevent potential relocation or drastic changes under new external management.
The financing mechanisms for these employee buyouts are also evolving. A 2025 study indicates that approximately 600 US firms are now being sold to their workers annually. Crucially, investment funds available to facilitate these deals have seen a significant increase, rising by 78% from $500 million in 2024 to $865 million last year. This growth in financing underscores the increasing viability and attractiveness of employee ownership as a succession strategy.
One common structure in the US for these transitions is the Employee Ownership Trust (EOT). Under an EOT, a trust is established to acquire ownership of the business on behalf of the employees, negating the need for individual staff members to purchase shares directly. The former owner then receives the agreed sale price in instalments, typically funded by a share of future profits. This model means the selling owner retains some risk, as payments are contingent on the ongoing success of the business, but it offers a structured path to exit while empowering the workforce.