For many business owners, retirement comes with a difficult question: Who will carry the business forward? Employee ownership deserves a place alongside more traditional succession options. Choosing employee ownership does not necessarily mean creating an Employee Stock Ownership Plan (ESOP) from scratch. For many owners, joining an established employee-owned company offers another path to liquidity while preserving continuity for their employees, customers, and business.
This matters now because New Jersey is facing a significant generational transition in business ownership. More than half of the state’s business owners are 55 or older, including 22% who are 65 or older. How they choose to approach succession will determine whether the businesses they built remain intact, whether experienced employees stay, and whether decades of institutional knowledge remain in their communities.
An ESOP can be an effective way to accomplish that, but creating one is not a simple solution. Rutgers research examining owners who considered an ESOP but ultimately pursued other options found that cost, complexity, regulatory requirements, and a lack of internal succession leadership can be barriers.
We should not mistake the value of employee ownership for an argument that every business needs to build its own ESOP. There is another way.
A retiring business owner can decide to partner with an established employee-owned company, allowing their business to become part of an existing ownership structure. The administrative infrastructure, experience, and employee-ownership culture are already there. Instead of spending the succession process creating a new system, the owner can focus on transitioning the business itself.
This model works particularly well for human services agencies where the people they serve require continuity of care. In New Jersey, support coordination agencies work with individuals and families who rely on the state’s Division of Developmental Disabilities (DDD) system to navigate services. When a support coordination agency changes ownership, families should not have to learn a new organization, build new relationships, or wonder whether the services and support they depend on will change.
Earlier this year, Infinity Today, a New Jersey support coordination agency, transitioned to 100% employee ownership through IPMG’s existing ESOP. Through this, I’ve learned that succession is about more than a transaction. Owners want to know that their employees and customers will be taken care of and that the business they built will retain what made it successful.
An established employee-owned company provides that continuity without requiring a business to create its own employee-ownership infrastructure. In Infinity Today’s case, the company retained its name, leadership, employees, and services while becoming part of an established employee-owned organization. For the individuals and families who rely on Infinity Today to navigate disability services, that means continuing to work with the people they know and rely on without a disruption in services. In human services, where trust and relationships are central to effective support, that continuity matters. When ownership changes, those relationships should not have to.
If the goal of succession is to preserve what made a company successful, why assume the only way to achieve employee ownership is to construct an ESOP from the ground up?
Between 2020 and 2024, the National Center for Employee Ownership identified 827 acquisitions by the largest 1,000 ESOP companies, bringing approximately 72,000 employees into employee ownership. The numbers point to this growing role for employee-owned companies as another path for business succession.
New Jersey is already taking important steps to help owners explore employee ownership. In September, Gov. Mikie Sherrill signed legislation expanding the New Jersey Economic Development Authority’s Employee Ownership Transition Program, including feasibility studies, consulting, education, and financing. The state has nearly 90 ESOPs covering more than 423,000 current employees and retirees.
There will be businesses for which creating a new ESOP makes sense. There will be others for which a family transfer, management buyout, or outside sale is the better fit. Succession is not one-size-fits-all.
For a business owner who wants liquidity, continuity, and a future for the people who helped build the company, joining an established employee-owned company offers something a new ESOP cannot: a proven ownership structure already in place.
New Jersey has an opportunity to make employee ownership part of the mainstream succession conversation. To do that, we need to stop asking only whether owners should create ESOPs and start asking a broader question: Who is already equipped to carry this business forward as an employee-owned company?
The answer may be closer than owners think. And it may not require starting from scratch.
Karen Brummet is the CEO, Indiana Professional Management Group (IPMG)
