ESOPs and the Coming Wave of Business Sales

Because most ESOPs are used to provide for business transition in closely held companies, probably the most important issue for the future of ESOPs will be demographics. A 2001 Federal Reserve Survey of Consumer Finances reported that 50,000 businesses changed hands in 2001. That number grew to 350,000 in 2005 and is projected at 750,000 for 2009. According to the 2008 survey "America's Entrepreneurialist Generation: Exit Planning and the Baby-Boomer Age Wave," 53% of baby-boomer business owners intend to exit in the next nine years. Only one in seven plans to pass their business on to a family member. Details of the survey are available at this link.