Rachel M. Cohen in The Intercept:
ASIDE FROM BEING a way to address inequality, the impending “silver tsunami” — the wave of baby boomer retirements expected over the next decade — is another reason ESOPs are gaining traction. According to a 2017 study by the worker ownership group Project Equity, 2.3 million businesses are owned by baby boomers who are approaching retirement, and these companies employ almost 25 million Americans.
While many of these business owners will fold quietly and sell their companies to competitors or private equity firms, ESOPs offer owners another alternative: selling the company to its workers. Advocates say this can help to better ensure that jobs remain in the local community, while still allowing the retiring owner to cash out. According to Project Equity, one-third of business owners over age 50 report having a hard time finding a buyer for their company. As a result, many just quietly close up shop, often without even considering selling their company to the staff.
But if ESOPs really can yield such positive results — for workers, owners, and local economies — why do they remain so obscure?