15% of Inc. 5000 Companies Plan to Sell to an ESOP

Roughly 15% of the companies on the Inc. 5000 list of fastest growing private companies that responded to an Inc. magazine survey say that selling to an ESOP is a likely strategy for transferring ownership. The percentage is not precise because only 62% of the companies on the list responded to the survey, and the poll let respondents choose more than one option. The most popular choice (72.6%) was selling to a private buyer, followed by going public (28.2%), selling to an ESOP (22.3%), and leaving the company in part or total to partners (15.3%). Our 15% estimate comes from recalculating the totals by adding up all the choices and dividing that into 22.3%.

The percentage may turn out to be higher than that long term. In reality, well under 1% of these companies will likely go public (follow-up surveys of companies on the smaller Inc. 500 list have shown that only about 10 in 500 end up going public). The percentage is impressive given that these are fast-growing and often young companies, not traditionally the primary market for ESOPs. The results appear in the September 2007 issue of Inc. magazine.