The Future of Small Business Transfer: Employee Ownership

Teamshares introduces an employee-owned equity model for business succession.
February 21, 2024
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White man in hate smiling in front of "custom fireside" fireplace - his small business

'The great wealth transfer' is here: Baby boomers are set to give trillions to their kids. Part of the wealth transfer will be in the form of family-run small businesses.

But what happens if your children have other career plans and don’t want to run your business?

Then, you look to sell your business.

A handful of companies want to tackle this problem by reducing the friction to sell, like and Tiny Acquisitions. These marketplaces, paired with more traditional sales processes like using an investment bank, make up the limited options for small businesses.

The problem is that 70% of small businesses fail to sell because the unit economics don’t make sense or the deal size is too small and not worth the investor’s time.

Teamshares, founded in 2019, plans to solve this problem with a new solution: employee ownership.

Teamshares buys small businesses and grants employees 10% ownership of the business’s stock after closing. Cash flow from the business is then used to repurchase and retire stock owned by Teamshares with the goal of progressively increasing employee ownership to 80% within 20 years.

Teamshares impact to date:

  • 89 employee-owned companies across 42 industries in 31 states
  • 2,500 new employee-owners
  • $30 million in new wealth created for employee-owners

Some companies who have chosen Teamshares as their succession plan:

Having demonstrated its model in the United States, Teamshares is ready to expand its business to Japan.

Japan has 2.45 million small businesses that will be 70 years or older by 2025, and nearly half have yet to choose a successor. Similar to in the United States, small businesses have found it very challenging to sell their businesses.

Teamshares is teaming up with Mitsui UFJ Financial Group, one of their investors, to help introduce its employee-owned concept to Japan.

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