Baby boomer entrepreneurs face a stark choice. Sell the company they spent decades building to private equity or a larger rival. Watch it close when no buyer appears. Or hand it to family members who may lack interest or aptitude. None of these paths sits well with founders who view their businesses as more than financial assets.
Yet the numbers paint an urgent picture. McKinsey researchers estimate that by 2035 more than six million small and medium-size businesses will undergo ownership transitions as their owners retire. Over one million of those firms hold viable potential for continued operation. Together they represent as much as $5 trillion in enterprise value. Without clear succession routes many will simply shut down. Jobs will vanish. Local economies will suffer.
Rick Plympton and Mike Mandina refused those limited options. The former CEO and founder of Optimax, a Rochester, New York, maker of high-precision optics, grew the firm from a 10-person operation that once struggled to meet payroll into a company with 500 employees and roughly 20 percent annual revenue growth. When succession talks began they ruled out a traditional sale. “Mike and I grew up blue collar—we don’t need to make billions of dollars,” Plympton told Fortune. “We wanted to create a corporate structure where the company could continue to grow and create jobs here in our community.”
They turned instead to an employee ownership trust. In 2020 the pair donated 20 percent of their equity to the trust. Over time they plan to sell their remaining shares back to the company. Once complete the trust will own Optimax outright. Profits will flow to employees through bonuses or get reinvested in the business. The model keeps jobs and opportunity rooted in the region. “In the first 30 years of Optimax we did $500 million in revenue and roughly half of that was shared with our workforce through salary benefits and bonuses,” Plympton added. “The janitor gets the same monthly bonus check as the president and every employee has a pathway to becoming a millionaire if they work with us for 30 to 40 years.”
Optimax stands as one example in a slowly expanding set of American companies testing alternatives to conventional exits. These approaches fall under the broad heading of steward ownership. The core idea separates economic rights from control. Owners cannot extract unlimited profits or sell the firm to the highest bidder. Instead voting power rests with individuals tied directly to the company—executives employees or designated stewards—who must advance its stated purpose. Profits get reinvested donated or used to sustain operations. The structure shields the business from speculative takeovers and short-term pressures.
Paul Newman took a version of this path long before the term gained currency. He and A.E. Hotchner began selling salad dressing in 1982 with the explicit plan to donate all profits to charity. Upon Newman’s death in 2008 the company passed to the Newman’s Own Foundation. That transfer raised legal questions until Congress passed the Philanthropic Enterprise Act in 2018 which clarified rules for such arrangements. Today the food company continues its mission under foundation oversight.
Yvon Chouinard chose a similar route for Patagonia. In 2022 he and his family placed the outdoor apparel maker into a perpetual purpose trust. The move ensured environmental priorities would not yield to shareholder demands. As Patagonia chair Charles Conn remarked in a World Economic Forum analysis the structure represents “the future of business if we want to build a better world for our children and all other creatures.” Chouinard himself framed it as trading “going public” for “going purpose.”
European companies have practiced versions of this model for generations. Robert Bosch established a foundation-owned structure for his German engineering group more than a century ago. The arrangement decoupled control from personal financial gain. It protected corporate values and ensured capable leaders rather than inheritors or financial buyers would guide the firm. Bosch still operates independently today. Similar foundation models support Rolex Carlsberg Lego and Novo Nordisk. The latter’s foundation recently became the world’s largest thanks to revenue from GLP-1 drugs. In India the Tata Trusts hold 66 percent of Tata Sons the parent of one of the country’s biggest conglomerates.
Back in the United States the conversation around these models has gained fresh energy. Michael Bloomberg announced plans in 2023 to transfer his shares in Bloomberg LP to a trust supporting his philanthropic work. The Walker Group a Connecticut information technology firm converted to a perpetual purpose trust that same year. Half its profits now support charitable causes while the other half rewards employees. In Philadelphia the Kensington Corridor Trust holds neighborhood property and resources under collective local governance. Profits stay within the community for reinvestment.
Employee ownership trusts represent one practical expression of steward principles. They differ from traditional employee stock ownership plans which often tie individual accounts to share value and can involve more complex tax and regulatory requirements. An EOT holds shares collectively on behalf of current and future employees. It emphasizes long-term benefit and independence. The National Center for Employee Ownership notes that EOTs and broader steward approaches overlap yet remain distinct. Employee ownership prioritizes direct stakes and engagement for workers. Steward ownership centers on protecting overall corporate purpose which may or may not place employees first. Their dialogue highlights how the two can reinforce each other when purpose clauses explicitly include employee welfare alongside other stakeholders.
Legal structures vary. Some companies use purpose trusts that embed mission requirements in governing documents. Others rely on foundations or golden shares that limit voting power. Oregon has experimented with stewardship trusts that provide clearer statutory backing. Most states still require creative adaptation of existing trust law which creates uncertainty and raises costs for founders considering the switch. Policy makers have begun to respond. Colorado and a handful of other states have introduced incentives or recognitions for employee ownership vehicles though broader reforms remain piecemeal.
The appeal goes beyond sentiment. Research shows companies with engaged employee ownership often deliver stronger long-term results. They report higher retention better innovation and more stable community ties. For founders the model solves a practical problem. Many lack obvious heirs. Others fear that selling would lead to immediate restructuring layoffs or relocation. Steward ownership lets them step away while the enterprise they created continues on its original terms. It turns succession into an act of stewardship rather than liquidation.
Challenges persist. Financing the transition can prove difficult without outside capital that might demand traditional equity returns. Education gaps remain wide. Many owners and their advisers have never encountered these structures. Valuation becomes complicated when profit extraction faces permanent limits. And cultural resistance lingers in a business environment trained to maximize shareholder value above all else. Yet the demographic wave will not wait. Half of all private U.S. businesses sit in the hands of owners nearing retirement. An estimated $84 trillion in wealth will change hands by 2045 according to Cerulli Associates data cited by the World Economic Forum.
So the experiments multiply. A Cleveland concert venue recently moved toward an employee ownership trust. Canadian policy makers made their EOT tax exemption permanent a move that could influence U.S. thinking. Conferences and networks dedicated to steward ownership now draw participants from multiple continents. The message spreads quietly but steadily. Founders do not have to choose between selling out and walking away empty-handed.
Plympton sees the potential clearly. If a handful of additional companies in his region follow Optimax’s lead the local economy could shift in measurable ways. More workers would gain pathways to meaningful wealth. Communities would retain employers rather than lose them to distant owners. The financial dynamics of entire areas could improve. His vision echoes a larger hope. That the great ownership transfer now underway might produce not just new billionaires but more resilient businesses rooted in purpose and people.
The models are not perfect. They will not fit every company or every founder. But they offer something scarce in today’s exit conversations. Real choice. A way to honor what was built without forcing it into the narrow mold of maximum extraction. For a generation that created millions of jobs and shaped local identities that option carries weight. And as more owners approach the end of their careers the question grows louder. Why sell when you can pass the mission forward instead?