Employee ownership boosts business growth, reduces turnover, and enhances productivity. It’s a path to stronger operations, sustainable success, and wealth-building for your employees. Explore the benefits of EO to see how it can transform your business.
- Selling your business isn’t always easy or guaranteed. In fact, 80% of businesses never sell, and only a small percentage of family-owned businesses are passed on to multiple generations.
- Selling your business to your employees ensures you get a competitive value for your life’s work and continued service for your customers and the community.
- Employee-owned businesses grow 2% more year-over-year than their traditional counterparts. When employees have an ownership mindset and a stake in the company, they are more likely to look for ways to increase productivity and profits. EO is an incentive for employees to stay longer and perform better, decreasing turnover costs.
- EO can fit your growth plans, giving you the financial stability you need to introduce new products, expand your footprint, and grow your business, while providing tax benefits you can realize while you still have a stake in the business.
Types of Employee Ownership
EO is highly flexible and can be structured in many ways; however, over the past several decades, three broad-based models have emerged as the most widely used: ESOPs, Employee Ownership Trusts (EOTs), and worker cooperatives.
Employee Stock Ownership Plan (ESOP)
- Recommended for companies with 40+ employees and $2M+ in revenue
- Tax benefits for the seller, the employees, and the business
- Highly regulated by the Employee Retirement Income Security Act and the Department of Labor
- No cost to employees who are given shares at retirement
Worker-Owned Cooperative
- Works for any size business
- Tax benefits for the seller and the business
- Governance is democratic with workers voting on board members, making up the majority of the board, and making major decisions in alignment with agreed-upon bylaws
- Employees have a small financial buy in, giving them a greater sense of ownership
- Ownership is equal amongst employees
- Lower setup and administrative costs
Employee Ownership Trust (EOT)
- Ensures perpetual ownership by employees
- Free to employees
- Flexible structure allows design specific to the needs of the business
- Lower setup and administrative costs
Employee Stock Ownership Plan (ESOP)
Worker-Owned Cooperative
Employee Ownership Trust (EOT)
Suitable
company size
40+ employees,
$750K EBITDA
Any size
Any size
Tax benefits
to selling owner
Can opt for §1042 deferral of gains
Can opt for §1042 deferral of gains
No
Tax benefits
to EO Business
S Corp tax avoidance
Tax deduction for patronage
Tax deduction for profit-sharing
Setup and ongoing costs
Any size
Low
Low
flexibility
of model
Within ESOP perameters
Within coop perameters
Highly flexible
Employees buy their shares
No
✔
No
Employee role in strategic decision-making
Optional
✔
Optional
Partial EO
Transition
✔
✔
✔
Profit-sharing
built in
No
✔
✔
Types of Employee Ownership
There are three main types of broad-based employee ownership, all of which have been around for many decades.
Employee Stock Ownership Plan (ESOP)
Worker-Owned Cooperative
Employee Ownership Trust (EOT)
Suitable
company size
40+ employees, $750K EBITDA
Any size
Any size
Tax benefits
to selling owner
Can opt for §1042 deferral of gains
Can opt for §1042 deferral of gains
No
Tax benefits
to EO Business
S Corp tax avoidance
Tax deduction for patronage
Tax deduction for profit-sharing
Setup and ongoing costs
Any size
Low
Low
flexibility
of model
Within ESOP perameters
Within coop perameters
Highly flexible
Employees buy their shares
No
✔
No
Employee role in strategic decision-making
Optional
✔
Optional
Partial EO
Transition
✔
✔
✔
Profit-sharing
built in
No
✔
✔
Many of our key accounts doubled down on their relationship with Optimax. They gave us even more work. They know that their supply chain will never be compromised and can invest in what we’re doing.

EO = Enterprise Optimization
- EO helps improve business operations and enhances profit margins, lowering employee turnover, and providing tax benefits that you can realize while you still have a stake in the business.
- Employee-owned businesses grow 2% more year-over-year than their traditional counterparts. When employees have an ownership mindset and a stake in the company, they are more likely to look for efficiencies and ways to increase productivity and profit.
- EO strengthens employee retention. Along with greater earnings and the ability to build wealth, the feeling of ownership and accountability is an incentive for employees to stay longer and perform better. Less turnover means smoother operations and less cost to the business.
EO = Exit Opportunity
- You’ve worked hard to build your business and now you are looking toward the next chapter. Maybe retirement is on the horizon or, perhaps, you are just ready for something new. Selling your business to your employees ensures you get a competitive value for your life’s work.
- Selling your business, or even passing it along to a family member, isn’t always easy or guaranteed. In fact, 80% of businesses never sell, and only a small percentage of businesses are passed down from generation to generation.
- EO allows you to retire with the assurance of a fair value for you, continued service for your customers and the community, and equity for your employees.
EO = Excellent Operations
- Reward the team that’s helped you build your business. An ownership mindset instills pride, accountability, and responsibility, which all have a very real impact on your business’ bottom line.
- Employee-owners are not just focused on getting the job done today, but take a long view of the company’s success. They tend to have an entrepreneurial point of view—continually looking for ways to contribute and improve. They take their commitments seriously and are accountable for their actions.
- Transitioning to an employee-owned business means they will get the training and support they need to be successful in their new roles as owners.
EO = Enduring Organizations
- EO can fit your growth plans, giving you the financial stability you need to introduce new products, expand your footprint, and grow your business. And, once you move on, you’ll be confident that your valued customers will still be able to rely on the service and products they trust. Your employees will keep their jobs and your community will continue to benefit from a thriving business.
EO = Equitable Outcomes
- Business ownership is very concentrated in America. The richest 10% of Americans own 90% of business wealth while the bottom half own only 0.25%. (Source: Harvard Business Review) This disparity has more businesses considering their roles in closing the wage and wealth gaps.
- EO is good for employees. Alongside homeownership and retirement plans, EO is one of the few ways workers can build wealth. Compared to traditional businesses, ESOP workers have 33% higher median wages and 92% higher median household net wealth. (Source: National Center for Employee Ownership) Employee-owners are more likely to have savings to cover unexpected expenses and emergencies.
- Additional income means more spending and investing in local communities. Whether shopping locally, dining out more often, or supporting local causes, higher wages and more net worth help build strong, sustainable communities.
Want to learn more?
Click on the interactive map below to connect with an EO expert in your state.







