Business succession planning is rarely straightforward. Business owners and their advisors need transition strategies that can provide more flexibility, preserve business continuity, and align with long-term goals. To discuss why more owners and advisors are considering broad-based employee ownership (EO) as a succession strategy, we brought together two perspectives from Project Equity: Stacey Smith, our Senior Vice President who oversees our client services department and works directly with owners navigating transition decisions, and Zarin Kresge, our Associate Director of Learning Programs, who helps business advisors understand and evaluate employee ownership as part of the broader succession planning landscape.

SMITH: In our work with business owners, we often see them come to succession planning assuming their options are limited to selling to an outside buyer, transferring ownership to management, or closing the business altogether. But many owners are looking for a more flexible path. Something that gives them more control over timing, helps preserve what they’ve built, and creates continuity for employees and customers. That’s one reason employee ownership is becoming an increasingly important option to consider.

KRESGE: We’re seeing that same shift among business advisors. Attorneys, CPAs, financial planners, exit planners — they all recognize that owners want more nuanced conversations around succession. Employee ownership gives advisors another strategic tool to help their clients think through priorities like legacy, workforce retention, phased transitions, and long-term business stability. The more advisors understand how EO can fit into succession planning, the better equipped they are to help clients evaluate the full range of options available to them.

Stacey, you and the client services team work directly with business owners every day as they think through succession planning and transition options. What are you hearing from owners about why employee ownership can be such a powerful and flexible path?

Flexible Timelines

SMITH: Timing is one of the first things business owners talk about when they begin thinking about succession planning. Their reasons for selling — whether it’s retirement, burnout, health concerns, or a desire to step back gradually — often shape the kind of transition they’re looking for. Employee ownership can offer a great deal of flexibility because owners can sell all or part of the business either all at once or over time. That creates opportunities for phased transitions that align with an owner’s personal, financial, and operational goals instead of forcing a single timeline or outcome.

KRESGE: That can also be incredibly valuable for business advisors. Many advisors are working with clients whose goals evolve over time, and employee ownership gives them another option to bring into the conversation. Instead of treating succession as a binary decision, advisors can help owners explore transition strategies that are more gradual, customized, and responsive to changing circumstances.

More Control Over the Process

KRESGE: A related issue is the question of control. Advisors often tell us that one of the hardest parts of succession planning is helping clients navigate deals where outside buyers ultimately control the pace, structure, and priorities of the transaction. Employee ownership can create a very different dynamic. Because the transition can be designed around the owner’s goals, advisors often have more opportunity to support thoughtful planning, phased decision-making, and long-term continuity rather than reacting to the demands of a third-party buyer.

SMITH: Control is key with owners as well. In a traditional sale, an outside buyer often dictates the timing and structure of the deal. With employee ownership, owners typically have far more control over the process, from when they exit and how much of the business they sell to their role after the transaction. For many owners, that flexibility creates a transition process that feels more intentional and aligned with both their personal goals and the future of the business.

Protecting Culture and Legacy

SMITH: For many business owners, succession planning isn’t just about the financial transaction. It’s also about protecting the culture, values, and legacy they’ve spent years building. That’s one reason employee ownership resonates with so many owners. EO can help preserve what makes a company unique while keeping the business rooted in the community and creating continuity for employees and customers alike.

KRESGE: We hear advisors talk about this more and more as well. Owners are increasingly weighing legacy considerations alongside valuation and deal structure, and advisors need strategies that account for both. Employee ownership gives advisors a way to have broader conversations about continuity, workforce stability, and long-term community impact — not just the mechanics of a sale. 

Creating Liquidity While Reducing Risk

SMITH: The mechanics of the sale matter too. Many business owners have a significant portion of their personal wealth tied up in the company. So, liquidity and financial security are naturally a major part of the conversation. One of the advantages of employee ownership is that it can provide meaningful liquidity while also allowing owners to diversify their wealth over time. Instead of being locked into a single, all-or-nothing transaction at closing, owners may be able to structure the transition to receive some proceeds upfront and additional payments over time based on what works best for their financial goals.

KRESGE: That flexibility can also help advisors better support the broader financial planning process. Employee ownership gives advisors another framework for helping clients think through liquidity needs, risk reduction, retirement planning, and long-term wealth diversification. Rather than focusing solely on maximizing a one-time transaction, advisors can help owners evaluate succession strategies that align with both their financial objectives and their long-term vision for the business.

Personal Tax Advantages

SMITH: For many people who are familiar with employee ownership, tax advantages are one of the first things they hear about, and for good reason. Compared to selling to an outside buyer, employee ownership structures can create potential tax benefits for the owner, the company, and sometimes the employees. For example, certain ESOP transactions may allow owners to indefinitely defer capital gains taxes under the right circumstances. While tax considerations are rarely the only factor driving a transition decision, they can create additional flexibility that makes employee ownership an even more attractive option for some owners.

KRESGE: Right. This is also an area where knowledgeable advisors can provide tremendous value. Because employee ownership structures can involve unique tax considerations, advisors who understand EO are often better positioned to help clients evaluate the full financial implications of different succession paths. Even when EO is ultimately not the right fit, understanding the potential tax advantages allows advisors to bring more informed and strategic guidance into the succession planning process.

One of the things we try to emphasize with advisors is that employee ownership isn’t just a transaction structure, it’s a long-term business strategy. The flexibility we’ve talked about around timing, process control, liquidity, legacy, and tax planning gives advisors more ways to help clients align succession decisions with both financial and personal goals. As more owners look for transition paths that protect what they’ve built while positioning the business for long-term stability, EO is becoming an increasingly important option for advisors to understand.

SMITH: At the end of the day, employee ownership is about more than exiting a business. It’s about shaping what comes next. For many owners, EO offers the opportunity to transition on their own terms while preserving the culture, values, and relationships that helped the company succeed in the first place. It creates continuity for employees, customers, and communities while giving the next generation an opportunity to continue building on that foundation. That’s why more owners are beginning to see employee ownership not just as an exit strategy, but as a way to create a lasting future for the business they’ve spent years building.

Owners and advisors who want to better understand whether employee ownership could fit into a succession strategy can explore Project Equity’s new succession planning toolkit. The toolkit is designed to help business owners evaluate transition options and start more informed conversations with their advisors.

About the Authors

Zarin Kresge
Associate Director, Learning Programs
Zarin leads Project Equity’s efforts to educate business advisors on how employee ownership can strengthen succession planning, differentiate their services, and deliver greater value to clients. He first discovered the power of employee ownership while completing his MBA at Presidio Graduate School. Before Project Equity, Zarin led growth and strategy at Certified Employee-Owned, building national recognition for the model and deepening engagement with employee-owners. He also serves on the board of the North Carolina Employee Ownership Center. Earlier in his career, he was Executive Director of a nonprofit thrift store and legacy business in San Francisco. Outside of work, he enjoys exploring local rivers, cooking, and spending time with his family.

Stacey Smith
Associate Director, Learning Programs
Stacey has spent most of her career helping businesses examine their impact and aligning it with their values. She started as a CPA with Arthur Andersen, then moved into strategy and organizational development. Seeking to devote her financial expertise to social and environmental issues, she was an early mover in the field of sustainability and corporate responsibility in the US. She joined Business for Social Responsibility in 2001 to build their business consulting practice and spent the next decade guiding Fortune 500 companies to address their negative impacts. Recently, Stacey began consulting to nonprofits and foundations to strengthen their strategy, management, and governance practices. Through her work with the Public Equity Group and her own independent practice, she explored the structural barriers to wealth and other drivers of generational poverty. At Project Equity she is helping grow our team of professionals to accelerate the adoption of employee ownership as a key to building wealth and high-quality careers in communities. In addition to having been a licensed CPA, Stacey has a degree in Business Administration from the University of Vermont and has done coursework in International Business Studies at the University of Copenhagen. When she is not working, you can find her hiking the Bay Area hills, indulging in the restaurant scene, and playing with her family.

To learn more about whether employee ownership is the right move for your business, download our free Succession Planning Toolkit!