Employee Ownership Sparks New Energy at Softstar Shoes
Staff at Softstar Shoes in Oregon have discovered a newfound enthusiasm for managing resources efficiently and increasing profits.
In January, the shoemaker transitioned to employee ownership, with its 30-strong workforce becoming the new owners.
Former sole owner and chief executive Tricia Salcido decided to sell the business to her employees as she prepares for retirement at age 56.
Salcido, who will remain as chief financial officer for the next few years, notes that colleagues are now actively contributing ideas on how to improve various aspects of the business.
"I'm getting personal emails from employees saying, 'well, have you thought about this idea?'" she says. "These are business insights that weren't forthcoming before!"
Salcido is part of a growing trend among US business owners who choose to transfer ownership to their employees rather than sell to external buyers.
According to a 2025 study, up to 600 US firms are sold to their workers annually, with investment funds supporting such deals increasing by 78% to $865 million last year from $500 million in 2024. This rise signals more businesses undergoing employee ownership transitions.
Research indicates that employee-owned companies tend to be more productive, less likely to lay off staff, and often pay higher wages, while also motivating employees who share in both risks and rewards.
For Salcido, selling to employees was a way to preserve local jobs and maintain the firm's artisan shoemaking within the US, a scenario she feared would be lost under a cost-cutting corporate buyer.
"It's something you put your life's work into… most small business owners really care," she says.
The Silver Tsunami: A Wave of Business Ownership Transitions
Many US entrepreneurs like Salcido are approaching retirement age and face decisions about their business futures.
Business consulting firm McKinsey reports that "baby boomer" owners of approximately six million American small and medium-sized companies will retire between now and 2035, a phenomenon some call a "silver tsunami."
McKinsey describes this as "a once-in-a-generation wave of ownership transitions."
Ethan Rouen, associate professor at Harvard Business School, remarks on the frequency of owners seeking to sell their businesses.
"I don't think a week goes by where I don't talk to an owner who is looking to sell their business." He adds that many owners' grown children are uninterested in taking over the family business.
Rouen and his colleagues believe employee ownership could help many firms survive and appeals to owners concerned about the fate of their employees after a sale to larger companies or private equity firms.
Protecting Legacies Through Employee Ownership
William Stockwell chose to sell Stockwell Elastomerics, a Philadelphia-based industrial components manufacturer founded by his great-grandfather in 1919, to his employees to safeguard its future.
He was motivated by observing other firms bought by outside owners, which often resulted in relocation, closure, or drastic changes detrimental to remaining staff.
"The new [outside] ownership might move the business, they might shut it down, or drastically change it in other ways, and the people remaining are stuck," he says.
Employee Ownership Structures in the US
There are several methods by which US workforces can acquire their companies. Softstar Shoes utilized an Employee Ownership Trust (EOT).
An EOT involves establishing a trust that holds business ownership on behalf of employees, eliminating the need for them to purchase the business directly.
The trust pays the former owner the agreed sale price in installments drawn from future profits.
This arrangement means Salcido must wait to receive her payment and assumes risk, as she depends on the business's continued success.
"I carry the risk, in that if anything happens, I don't get paid," she says. "But I have faith in my team to deliver." Employees also share in annual profits.
Stockwell chose a different approach: an Employee Stock Ownership Plan (ESOP).
Under an ESOP, the business is held in trust, and employees receive shares they can cash out only upon leaving the company.
Like Salcido, Stockwell must wait for his payment, accepting installments over ten years, which he describes as a "short-term financial sacrifice."
"I'm accepting payments over 10 years," he says.
ESOPs are the most prevalent employee ownership method in the US. In 2023, 6,609 companies operated under ESOPs, employing 10.9 million people and holding assets exceeding $2 trillion (£1.5 trillion).
A third method is the worker cooperative, where employees purchase shares of the business directly.
Appeal of Employee Ownership Across Generations
Rouen notes that employee ownership attracts not only retiring founders but also younger workers disillusioned by traditional corporate hierarchies.
"The only way to truly create wealth in this country is through ownership of capital. And this is a way to democratise that," he says.
However, EOT and ESOP setups are more complex than traditional sales, potentially deterring some owners. The longer wait for payment and associated risks also pose challenges.
Awareness of these schemes remains limited, as Salcido observes.
"No one's heard of them," she says.
Ongoing Transitions and Future Outlook
In central Pennsylvania, Paul Silvis is in the process of selling his manufacturing company, SilkoTek Corporation, to his employees.
"I'm getting ready to ride off into the sunset at some point," says the 71-year-old.
Stockwell advises that owners wishing to transfer ownership to employees should begin planning well in advance, as the process can take years.
"It's not something you want to begin the year you want to retire," he says.
Rouen highlights growing political support in Washington to simplify employee ownership transitions. The Department of Labor has launched an Employee Ownership Initiative to promote and provide guidance on the practice.
He adds that bipartisan Congressional efforts aim to make selling to employees a more accessible and realistic option for business owners.
"My hunch is that we will see more successful employee ownership conversions in the next few years."
