As more business owners look toward their exit, one question continues to define their future: “What will happen to my business after I step away?”
With the “silver tsunami” of retiring Baby Boomers already underway, Certified Exit Planning Advisors (CEPA®) are helping owners face one of the most important transitions in their company’s history. According to Project Equity, a national nonprofit advancing employee ownership, this moment can represent a great change for how business owners exit their businesses.
“We think of the silver tsunami not as something that’s coming. It’s already here, crashing on our shores,” says Zarin Kresge, Associate Director, Learning Products at Project Equity. “This is a moment of both risk and opportunity for small business continuity.”
For CEPAs guiding clients through employee ownership, Employee Ownership Trusts (EOTs) are gaining attention as a flexible, mission-aligned alternative to traditional third-party sales.
What is an Employee Ownership Trust?
An EOT is a legal structure in which a trust holds some or all of a company’s shares on behalf of its employees. Rather than employees purchasing shares individually or through a formal Employee Stock Ownership Plan (ESOP), the trust becomes the owner, and the employees benefit collectively from profit sharing and governance participation.
According to Project Equity, the EOT model offers a simpler, lower-cost entry point into employee ownership for smaller and mid-sized businesses, particularly those that may not be a fit for an ESOP.
“There’s a large portion of small and mid-sized businesses that aren’t really a fit for ESOPs,” says Zarin. “EOTs are flexible and customizable. They can work for small companies and scale as they grow.”
The structure enables business owners to preserve company culture and mission—two factors that strengthen a company’s intangible capital and support the Value Acceleration Methodology™. It also helps maintain local jobs and ensure the business remains independently owned for years to come, all while creating a liquidity event for the departing owner.
Why an EOT Might be the Right Choice
Employee ownership models like EOTs are not new, but their relevance has surged as business owners become aware of all the different exit options. For many small business owners, a third-party buyer isn’t an option or isn’t the right fit to preserve their legacy.
Employee ownership offers an attractive alternative for owners who are deeply invested in the company’s future: sell the business to the people who know it best.
“A big focus of what we do is scaling employee ownership through awareness and education for business advisors, including attorneys, CPAs, wealth planners, and anyone small business owners turn to for advice,” says Zarin. “We’re really focused on building out a larger network of advisors who have some understanding of employee ownership. These are the people who can build this into their practice as a way to create new revenue opportunities while helping their clients keep businesses thriving.”
For CEPAs, that insight can empower them to expand their toolkit to include employee ownership as a viable option. While employee ownership can sound complex, advisors are often the ones who make it possible. Business owners rely on trusted advisors, including the CEPA, to propose and champion strategic options that align with their financial goals and personal values.
“When you advise on an employee ownership transition, you don’t lose that relationship with the business owner,” says Zarin. “You maintain long-term connections with them and their employee-owners—and can grow your assets under management.”
For advisors, incorporating employee ownership education through resources from groups like Project Equity and the Exit Planning Institute® (EPI) creates the long-term benefit of maintaining a way to continue serving businesses even after ownership changes hands.
Employee Ownership as a Legacy Tool
At its core, the employee ownership conversation is about legacy. Owners who have built their companies from the ground up often want to see their people, customers, and community continue to thrive long after their exit.
EOTs help make that possible. They represent a growing model of “ownership succession” rather than simple business sale—one that reflects the human side of exit planning.
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