An employee buyout involves transferring ownership of a company to its workforce. This can be achieved through various mechanisms, such as an employee stock ownership plan (ESOP), a direct sale, or the formation of a worker cooperative. For instance, a retiring founder might sell the business to long-term employees instead of seeking an external buyer.
Such transitions offer significant advantages for all stakeholders. Sustaining a company’s legacy, preserving jobs, and rewarding employee loyalty are common motivations. Historically, this practice has empowered employees, fostered greater commitment, and contributed to local economic stability. These ownership structures also offer tax benefits and can improve productivity and profitability through increased employee engagement.
