A wave of American business owners approaching retirement is turning to an unlikely solution: selling their companies to their employees. The trend, which sees firms converted into employee-owned trusts, has been hailed by campaigners as a victory for workers’ rights and a potential answer to the UK’s own retirement crisis.
In the United States, the number of employee stock ownership plans (ESOPs) has surged in recent years, with over 6,500 now in operation covering 14 million workers. The driving force is simple: baby boomer owners want to retire, but family buyers are scarce and private equity offers often mean job cuts. Selling to staff ensures the business stays independent, protects jobs, and gives workers a direct stake in profits.
“It’s a lifeline for communities that would otherwise see factories closed and jobs shipped abroad,” said Janet Morrison, chief executive of the UK’s Employee Ownership Association. “The US is recognising what we’ve known for decades: employee ownership builds resilience, wealth, and loyalty.”
The UK model, which has seen a tripling in employee-owned firms over the past decade, is held up as a blueprint. Companies like John Lewis and Riverford Organic Farmers are household names, but the model is increasingly adopted by small and medium enterprises. Under the UK’s ‘employee ownership trust’ structure, a trust holds a majority stake on behalf of workers, with profits shared through bonuses or reinvestment.
Critics warn that the system is not a panacea. Employee-owned firms can struggle to raise capital, and without strong unions, workers may still face pay constraints. But for John McGrath, a 62-year-old factory owner in Ohio, selling to his 200 staff was the only option that felt right. “I didn’t want to see everything we built ended up in the hands of some hedge fund that would strip it for parts,” he said. “My workers know the business better than anyone. They deserve a share of the rewards.”
The trend comes as the UK faces a similar retirement wave. with over 500,000 business owners expected to exit in the next decade. The Employee Ownership Association warns that without action, many firms could be sold to foreign buyers or closed, costing thousands of jobs. It has called on the government to expand tax reliefs for employee ownership and promote the model in sectors like manufacturing and retail.
For workers, the shift is life-changing. “It’s not just about dividends,” said Sarah Jenkins, a machinist at an employee-owned engineering firm in Sheffield. “It’s about having a say. When times are tough, we all tighten our belts together. When they’re good, we all benefit. It’s proper democracy at work.”
As the US embraces employee ownership, the UK must decide if it will protect this model before it is too late. The clock is ticking for a generation of business owners – and their workers.
