While some of these businesses will be passed down to members of the family or others, about 6 out of 10 are expected to wind up on the auction block in the next decade because the owners need to sell out in order to retire.
Small businesses are sold to their managers or workers using one of three methods:
• an employee stock ownership plan or ESOP,
• a worker cooperative
• or an employee trust.
Its most important element involves permitting the SBA to clear away many previous barriers so it can make guaranteed loans of up to $5 million to employee-owned businesses, especially ESOPS and worker cooperatives. This will make employee buyouts easier to do by significantly expanding the amount of credit available and will create more flexibility for sellers so that they can transition out of their businesses over a few years.