As More US Business Owners Retire, Many Are Transferring Ownership to Their Staff

As more US business owners retire – When Tricia Salcido, the former owner of Softstar Shoes in Oregon, decided to step down from her role as chief executive, she didn’t just hand over the keys to her business. Instead, she sold it to her 30 employees, sparking a shift in how ownership is managed for small enterprises in the United States. This move, which took place in January, marks a growing trend among business leaders nearing retirement age. Salcido, who will remain as chief financial officer for the next few years, explains that her team is now actively contributing ideas for improving operations, a change she hadn’t seen before. “I’m receiving personal emails from colleagues with fresh suggestions, like, ‘have you considered this approach?’” she says. “These insights were previously absent.”

The Rise of Employee-Owned Businesses

According to a 2025 study, approximately 600 US companies are being transferred to their workforce annually. This number has increased significantly, with investment funds supporting such transitions rising by 78% to $865 million in 2024 from $500 million the previous year. The trend reflects a broader cultural shift, as more entrepreneurs are opting to pass their enterprises to employees rather than external buyers. For Salcido, this decision was driven by a desire to maintain the company’s local roots and preserve its artisanal shoemaking heritage. “I believed a corporate buyer would eventually relocate the business or reduce its US presence to cut costs,” she says.

The phenomenon is being described by some analysts as a “silver tsunami” due to the large number of baby boomer entrepreneurs planning to retire between now and 2035. A recent report from McKinsey & Company highlights that around six million small and medium-sized businesses in the US are owned by individuals in this demographic. As these leaders approach retirement, they face critical choices about the future of their companies. Ethan Rouen, an associate professor at Harvard Business School, notes that this transition is becoming a defining characteristic of the era. “I’ve spoken to an owner every week who’s considering selling their business,” he says. “The challenge is ensuring the company remains viable after the transfer.”

Why Employees Are Becoming Owners

Employee-owned businesses are gaining traction because they align the interests of workers and management. Research indicates that such companies often see higher productivity, reduced layoffs, and increased wages. For many retirees, this model offers a way to ensure their legacy lives on while mitigating risks. “It’s not just about money; it’s about values,” says Salcido. “You want the business to thrive under people who understand its culture.”

William Stockwell, the owner of Stockwell Elastomerics, a Philadelphia-based manufacturer established in 1919 by his great-grandfather, is another example. After observing how other companies had been transformed or closed under new ownership, Stockwell chose to sell to his employees. “The new owners might move the business, shut it down, or alter it drastically,” he explains. “The existing staff could end up being left behind.” Stockwell’s decision reflects a growing concern among entrepreneurs about the fate of their companies after selling to external buyers, particularly private equity firms or larger corporations.

There are several ways US businesses can transition to employee ownership. One popular method is the Employee Ownership Trust (EOT), which Softstar Shoes utilized. An EOT allows the workforce to purchase the company through a trust, which holds the business until employees have acquired it. The trust then pays the former owner a predetermined amount over time, tied to future profits. This structure means Salcido must wait for her compensation, with the business’s success determining her return. “I carry the risk, in that if anything happens, I don’t get paid,” she says. However, she remains confident in her team’s ability to sustain the company.

Stockwell, on the other hand, opted for an Employee Stock Ownership Plan (ESOP). While similar to an EOT, an ESOP involves employees receiving company shares that can only be cashed in upon leaving the organization. This method also requires the retiring owner to wait for their payment, but it offers employees a different kind of stake in the business. “I’m accepting payments over 10 years,” says Stockwell, who now works part-time at Stockwell Elastomerics. “It’s a long-term commitment, but one that aligns with my vision for the company.”

Benefits and Challenges of the Transition

Supporters of employee ownership argue that it fosters a stronger sense of loyalty and shared responsibility. When workers become stakeholders, they are more likely to invest in the company’s growth and stability. This dynamic has proven advantageous in retaining skilled labor and maintaining product quality, as seen in Softstar Shoes’ case. However, the transition is not without its challenges. Former owners must relinquish control and trust their teams to manage operations effectively. For Salcido, this means she is no longer the sole decision-maker, even as she retains a financial stake.

The rise in employee ownership is also reshaping the US economy. As baby boomers retire, their businesses are becoming a critical resource for job creation and economic stability. McKinsey & Company’s report underscores that this wave of ownership transitions could be one of the most significant in history. “It’s a once-in-a-generation opportunity to restructure how small businesses are managed,” the firm states. The shift is particularly notable in industries where craftsmanship and local presence are valued, such as manufacturing and retail.

Despite the advantages, not all businesses are making the move. Many entrepreneurs are hesitant to sell to employees due to the complexities involved. Rouen highlights that the decision often depends on the owner’s relationship with their workforce and their concerns about external buyers. “If you’re passionate about your employees, transferring ownership to them makes sense,” he says. “But it requires careful planning and a willingness to step back.”

For those who do embrace employee ownership, the rewards can be substantial. Salcido’s experience demonstrates that the transition can stimulate innovation and collaboration. “My colleagues are now treating the business like a shared project,” she says. “It’s invigorating to see new ideas come to life.” Similarly, Stockwell believes that his employees are better equipped to preserve the company’s identity. “They care about the same things I do—quality, community, and tradition,” he adds. These perspectives suggest that employee-owned businesses are not just about financial gain but also about cultural preservation.

A Future Shaped by Shared Ownership

As the baby boomer generation continues to retire, the question of who will take over their businesses is becoming increasingly urgent. With over six million companies at risk of being sold to external buyers, the trend toward employee ownership offers an alternative that many entrepreneurs are embracing. This shift is not only about sustainability but also about creating a more equitable system where workers have a direct stake in the company’s future.

Experts suggest that this movement could redefine the American business landscape. Rouen notes that employee ownership is a viable solution for businesses struggling to find successors. “It’s a way to ensure the company doesn’t disappear after the owner leaves,” he says. The growth of investment funds dedicated to such transitions further supports this model, providing the financial backing needed for these deals to succeed.

While the process requires careful consideration, the benefits for both the business and its employees are clear. By transferring ownership to their workforce, entrepreneurs can maintain the company’s values, ensure its long-term viability, and create a more motivated team. For Salcido and Stockwell, this means the legacy of their businesses will live on through the hands of those who understand its mission. As more owners make this choice, the concept of shared ownership is gaining momentum, signaling a new era in how companies are managed and valued in the US.