When Cincinnati-based BHDP Architecture became 100% employee-owned on June 1, 2026, its leadership did not head for the exits. The firm announced that all 11 former shareholders would remain in their leadership roles. Such retention and continuity of management through a 100% ownership change deserves attention.

For an owner contemplating succession, “Who will own the business?” and “Who will run it?” are two different questions. An “employee stock ownership plan,” or ESOP, can help separate them.

In the U.S., an ESOP is a tax-qualified retirement plan (as are 401(k) plans, cash balance plans, etc.) that is specially designed to hold company stock in a trust for eligible employees. In a succession transaction, the trust purchases some or all of the owners’ shares. Company cash, bank debt, seller financing, or a combination of these can be used to fund the transaction. Employees generally do not pay out of pocket to participate; instead, shares are allocated to their plan accounts over time based on a specified formula. Importantly, employees’ ESOP accounts give them a financial stake in the business’s future.

Cincinnati-based The Motz Corporation offers another example. In March 2025, the innovative turf company announced it had become 100% employee-owned after founder Joe Motz sold his remaining shares. The announcement emphasized that the sale did not mean retirement. Rather, it created room for Mr. Motz to focus on philanthropy and community partnerships. Ownership changed, but his connection to the business continued.

Employee ownership does not mean management by committee. Executives still manage, and a board still oversees the operation and affairs of the business. An ESOP trustee acts for employees’ interests as a shareholder. Continued family leadership therefore comes with real accountability (but not with the intrusion or discontinuity that often comes with a sale to a strategic or financial buyer).

Owners considering an ESOP transaction should ask three practical questions:

What are we trying to preserve?

The company’s independence, its local presence, opportunities for family members, or the people who helped build it? Rank these priorities alongside the financial goals for the exit (noting that an ESOP cannot pay more than fair market value, while an outside buyer may offer a premium).

Who can lead without us?

An ESOP does not create a management team. Identify the people who can make decisions, manage customer relationships, and develop the next generation of leaders.

Can the business afford it?

The company needs sufficient cash flow to support the purchase while funding operations and growth. Borrowing or payments to selling-owners over time may be involved. Add ongoing administration, annual valuations, and future payouts to departing employees. A feasibility study can help determine whether the company can afford to support the ESOP structure over time.

When succession planning comes up at your next family or board meeting, try separating the discussion into three columns: ownership, leadership, and financial security, and ask what each should look like five years from now. The answer may ultimately be a family transfer, an outside sale to a strategic or financial buyer, an ESOP transaction, or a combination. However, keep in mind that with an ESOP transaction, changing ownership does not mean having to say goodbye, which is certainly not always the case with other succession strategies.