Van Hollen, Moran, Moore, Trahan Introduce Bipartisan Bill to Boost Employee Ownership of Businesses

Today, U.S. Senators Chris Van Hollen (D-Md.) and Jerry Moran (R-Kan.) and U.S. Representatives Blake Moore (R-Utah) and Lori Trahan (D-Mass.) introduced bipartisan, bicameral legislation to make it easier for private companies to transfer ownership of a business to their employees. Currently, over 30 percent of U.S. corporate stock is owned by foreign investors, and foreign corporate ownership is set to increase as a wave of business owners in the baby boom generation retire and sell their companies (known as the silver tsunami). The lawmakers’ American Ownership and Resilience Act would return a greater share of American profits to American workers by supporting the sale of businesses to their employees.

Studies have shown that employee-owned companies are more productive, prove more resilient during challenging economic conditions, and enable workers to build more wealth compared to those at traditional firms, while keeping local businesses rooted in their communities.

“American workers are the driving force behind our economy. By spurring more employee ownership of businesses, we’re investing in our workers and putting more of their hard-earned dollars back in their pockets, instead of sending U.S. profits overseas. This bipartisan bill will offer businesses the tools they need to transition to an employee ownership structure – empowering everyone to share in the success of the enterprise and keeping jobs, opportunity, and profits in our communities across America,” said Senator Van Hollen.

“When businesses use an Employee Stock Ownership Plan (ESOP), it allows for employees to gain ownership as they work at the company,” said Senator Moran. “Our legislation would provide more flexibility to employers who wish to transition to an ESOP by mobilizing private investors to close the financing gaps that frequently prevent employee-ownership. Strengthening ESOPs give employees a meaningful stake in their employer and allows companies to retain a productive and satisfied workforce.”

“We will soon witness the greatest transfer of assets in American history as over two million U.S. business owners near retirement in the next decade. During a period of increased global competition, ESOPs serve as a valuable option to keep businesses open and American-owned,” said Congressman Blake Moore. “The American Ownership and Resilience Act will empower and support business owners and workers who want to transition to employee ownership, building substantial livelihoods for new employee owners and protecting our domestic supply chain from hostile foreign competitors.”

“Giving workers a real stake in the companies they help build isn’t just fair – it’s good business,” said Congresswoman Trahan. “Employee ownership drives stronger performance, deeper retention, and lasting profitability. It can turn a 9-to-5 job into a wealth-building opportunity, offering working families the chance at both stability and long-term success. The bipartisan American Ownership and Resilience Act expands access to this powerful – and too often out-of-reach – path to ownership and economic mobility for workers across the country.”

Text of the legislation can be viewed here.

Nearly half of all private businesses are owned by individuals who are at or near retirement age – totaling 2.9 million companies that employ over 32 million workers. Many of these owners will sell their businesses to buyers in the mergers and acquisitions (M&A) market or close their doors, ultimately resulting in the loss of jobs and businesses in local communities. Employee ownership can be a solution to preserving those jobs and local economic activity, but the current process of transitioning to this model is burdensome. The status quo typically places the onus on the business owner to initiate the transaction, ensure compliance with complex regulations, and provide the financing themselves – a difficult ordeal that, provided it is successful, ends with owners waiting several years to receive their full payout from the transaction.

The American Ownership and Resilience Act creates a new zero-subsidy investment facility administered by the U.S. Commerce Department to provide loan guarantees to support licensed private investment funds devoted to expanding employee ownership at small and mid-size businesses. These investment funds would finance and facilitate the process of selling a company to its employees, and sustain and expand existing employee-owned firms.

This legislation is cosponsored in the Senate by Senators Tammy Baldwin (D-Wis.), Todd Young (R-Ind.), Jeanne Shaheen (D-N.H.), Eric Schmitt (R-Mo.), and Peter Welch (D-Vt.). In the House it is cosponsored by Representatives Dusty Johnson (R-S.D.) and Bill Foster (D-Ill.).

“This legislation will make it easier to establish or expand employee-ownership, incentivizing American businesses and creating new economic opportunities for Hoosier small business owners and their employees,” said Senator Young. 

“Our bipartisan proposal would make it easier for businesses to transition to employee ownership, which has been proven to support our local economies, create quality jobs and provide financial stability for the workforce during turbulent times,” said Senator Shaheen. “The American Ownership and Resilience Act supports employees in buying the companies they work at, fueling economic opportunities and protecting local jobs. I’m looking forward to earning the bipartisan support needed to make our bill law.”

“Ensuring that American businesses stay in the United States and employ American workers is of the upmost importance to our economic success in the future. Our bill to allow the sale of U.S. businesses to American workers is a commonsense solution that not only keeps the businesses in our country but allows the American worker to build equity and investment in their own hard work,” said Senator Schmitt.

“Vermont has the highest rate of worker cooperatives in the country, and I’m proud join this bill to advance the employee ownership movement. The benefits of ESOPs are clear: helping folks save for retirement, keeping prices low for customers, and strengthening local and rural economies,” said Senator Welch. “This bipartisan legislation will build more wealth for American workers and support local businesses.”

Stakeholders endorsing the American Ownership and Resilience Act include The ESOP Association, Economic Innovation Group, New American Industrial Alliance, Small Business Majority, Sorensen Impact Group, and U.S. Impact Investing Alliance.

“The ESOP Association strongly supports the bipartisan American Ownership and Resilience Act, which takes a proven approach to solving one of the biggest challenges facing employee ownership: access to capital,” said James Bonham, President and CEO of the ESOP Association. “By unlocking new financing options without creating a burden on taxpayers, this bill offers a smart, practical solution that could dramatically expand the reach of employee ownership across the country. We are grateful to the bill’s sponsors in the House and Senate for working closely with the ESOP community and for building broad, bipartisan support for this commonsense legislation.”

“Improving access to capital—especially through low-cost, high-impact solutions like the American Ownership and Resilience Act—is essential for accelerating the growth of employee-owned businesses,” said Ben Holder, Chief Executive Officer of Plastic Products Company Inc. and Chair of the ESOP Association’s Public Policy Council. “This bill represents a major step forward in addressing a long-standing barrier for companies transitioning to employee ownership. We applaud the Members in the House and Senate who are leading this effort for their commitment to advancing broad-based ownership.”

“The approaching wave of generational business succession across America poses acute risks to the vitality of our industrial base. By enabling the private sector to accelerate the growth of employee ownership, the American Ownership and Resilience Act offers a bipartisan opportunity to bolster U.S. economic security and supply chain resilience while creating an additional source of retirement wealth for American workers and families,” said Jack Moriarty, Executive Director of Lafayette Square Institute.

“American small businesses are facing a silver tsunami of retirements, marking an opportunity to ensure that ownership of these businesses stays local. And investors are ready to support the transition of these businesses to employee ownership. The U.S. Impact Investing Alliance is proud to endorse the American Ownership and Resilience Act, an innovative piece of legislation that will leverage private capital to bolster employee ownership models and create shared prosperity for entrepreneurs, small businesses and local communities,” said Fran Seegull, President of the U.S. Impact Investing Alliance.

“The Economic Innovation Group (EIG) applauds the introduction of the bipartisan American Ownership and Resilience Act. This legislation would help a wider array of small and medium-sized businesses whose owners are nearing retirement age make the transition to employee ownership, thereby supporting local economies, strengthening our supply chain and strategic competitiveness, and building wealth and retirement security for American workers,” said Catherine Lyons, Director of Policy at the Economic Innovation Group. 

“Maintaining a robust American manufacturing sector requires steering private institutional capital sources towards domestic production. Small and mid-sized American manufacturers across the country are preparing for business succession, and employee ownership offers a unique opportunity to prevent offshoring while investing in the American workforce," said Julius Krein, Chairman of the New American Industrial Alliance.

“The American Ownership and Resilience Act offers a tremendous opportunity to mobilize capital to build wealth for hard working Americans, generatie market rate returns for investors while building more resilient domestically owned companies,” said Jim Sorenson, founder of Sorenson Impact Group. “Business ownership is one of the most important avenues of wealth creation that is out of reach for many Americans. Employee Stock Ownership Plans (ESOPs) have long been a way for employees to become owners building wealth in the privately held companies they work for, using the tools of capitalism and free markets to broaden economic prosperity.”

“Small business owners welcome legislation that would make it easier for them to one day sell their companies while also leaving a lasting legacy and benefiting their employees in the process,” said Small Business Majority Founder & CEO John Arensmeyer. “This is particularly important at a time when a record number of small business owners are thinking about retirement. Employee Stock Ownership Plans are a great way to support community-owned business models that also provide retirement benefits for the shared owners and exit strategies for founders of businesses.”