Volume 94: The Great American Sell-Off: What Happens When Private Equity Buys Up Our Local Businesses?
About ImpactPHL Perspectives:
ImpactPHL Perspectives is a multi-part content series that explores the many facets of the impact economy in Greater Philadelphia from the perspectives of its doers, movers, shakers, and agents of change. Each volume is written directly by a leader in this space to discuss best practices and share lessons learned while challenging our assumptions about financial and impact returns. For more thought leadership like this, check out the full catalog of ImpactPHL Perspectives.
Katie Boland, Co-Founder, Unlock Ownership
Imagine walking down the main street of your town five years from now. Picture your favorite bakery, the reliable HVAC repair service you’ve used for a decade, the local independent pharmacy where your friend’s daughter works, and the manufacturing plant that employs fifty families. Now, imagine that while the storefronts remain, the businesses you loved are effectively gone. The names might have changed to generic national brands, or perhaps they kept the old sign but gutted the soul of the operation. The staff you knew have been laid off, prices have spiked, and the quality has deteriorated so sharply—frozen pastries, aggressive upselling, and endless wait times—that you no longer want to shop there. The profits that once sponsored the local Little League team are now being siphoned off to a skyscraper in Manhattan, leaving behind a hollowed-out shell of the community you once knew.
“Now, imagine that while the storefronts remain, the businesses you loved are effectively gone... the profits that once sponsored the local Little League team are now being siphoned off to a skyscraper in Manhattan, leaving behind a hollowed-out shell of the community you once knew.”
This isn’t just a cosmetic change; it’s a fundamental degradation of value. We’ve seen the playbook in the veterinary industry, where private equity rollups have led to higher prices, rushed appointments, and a focus on upselling unnecessary tests rather than animal welfare. We’ve seen it in HVAC, where technicians are pressured to sell full system replacements instead of affordable repairs. We’ve seen it in dentistry, where the "standard of care" is quietly rewritten to maximize billing codes. When profits are the only metric, customer value is the first casualty. The local knowledge, the fair pricing, and the trusted handshake are replaced by a corporate algorithm designed to extract the maximum amount of cash from your community before the next quarterly report.
This isn’t a dystopian fiction. It is the very real, immediate future we are barreling toward. We are standing on the precipice of the "Silver Tsunami." Right now, baby boomers own about 40% of all small businesses in the United States—roughly 2.9 million companies employing millions of people. As this generation retires, an estimated $10 trillion in productive assets is about to change hands. This is the most significant transfer of wealth in history. And it poses a choice that will shape our economy for the next century: Who will own the future of American business?
The Twin Threats: Extraction or Extinction
The reality is starker than most realize. Statistically, only one in five businesses put up for sale ever finds a buyer. Fewer than 30% are passed down to family members. This leaves millions of healthy, profitable businesses facing a grim binary: they will either be acquired by extractive capital or simply close their doors, vaporizing jobs and community wealth in an instant.
If we do nothing, the default buyer for the best of these businesses is Private Equity. In the vacuum created by these retiring owners, extractive capital is moving in at an aggressive pace. These firms are not buying your local business to steward its legacy or support your community. They are buying it to extract value.
“When Private Equity wins, the community loses. Decisions are no longer made by people who live in the neighborhood; they are made by fund managers obsessed with quarterly returns.”
Their playbook is brutal and standardized: acquire the company, load it with debt, cut costs by firing long-time employees, slash benefits, and consolidate operations. They strip the "local" out of the business, turning unique community pillars into standardized assets optimized for short-term cash flow for investors.
When Private Equity wins, the community loses. Decisions are no longer made by people who live in the neighborhood; they are made by fund managers obsessed with quarterly returns. The wealth that should circulate locally—paying for groceries, mortgages, and tuition—is extracted. Consider that foreign investors already own 40% of U.S. corporate stock; selling Main Street to Wall Street often means shipping our economic engine overseas.
The Alternative: Anchoring Wealth, Not Extracting It
But there is another path. We don't have to sell off the American economy to the highest bidder. We can sell it to the people who built it: the workers. We have a unique opportunity to transition these retiring businesses into Employee Ownership. Whether through Employee Stock Ownership Plans (ESOPs), worker cooperatives, or Employee Ownership Trusts (EOTs), we can transfer these assets to the people who show up every day to make them run.
The potential impact is staggering. According to the Ownership Capital Lab, if we transitioned just 10% of these Silver Tsunami businesses to employee ownership, we could secure 2.6 million jobs, preserve $600 billion in economic activity, and build wealth for 8.2 million Americans. The difference is profound. When workers own the business:
The jobs stay. Employee-owned companies are statistically far less likely to lay off workers during downturns.
The wealth stays. Employee-owners have a household net worth nearly twice that of their peers in non-employee-owned companies. This isn't a trickle-down theory; it is direct wealth creation.
The business stays. These companies are anchored in their communities, preserving the local character and economic resilience of our towns.
“In the vacuum created by these retiring owners, extractive capital is moving in at an aggressive pace. These firms are not buying your local business to steward its legacy or support your community. They are buying it to extract value.”
This isn't theoretical. Look at Apex Plumbing in the Denver Metro Area. For 37 years, it was a family-owned business providing vital residential sewer and water line services. In May 2022, when the owner retired, he faced the classic choice: sell to a competitor or PE firm, or find a way to preserve his legacy. He chose the latter. With financing and support from Apis & Heritage Capital Partners, Apex transitioned into a 100% employee-owned business through an ESOP. Instead of the value being extracted by a distant firm, shares were allocated to the employees—the very plumbers and staff who built the company's reputation. The result? The service quality remains high because the people doing the work now own the outcome. The jobs are secure. And the wealth generated by fixing Denver's pipes stays in the pockets of Denver's workers. This is what anchoring wealth looks like.
A Lever for Racial Justice
This transition is also one of the most powerful levers we have for racial and economic justice. The retiring business owners are predominantly white baby boomers. The workforce that powers these companies is increasingly diverse. By facilitating the sale of these businesses to their employees, we aren't just saving jobs; we are orchestrating a massive transfer of wealth to Black and Brown workers who have been systematically excluded from asset ownership.
We aren't talking about a small holiday bonus. We are talking about genuine ownership—robust research suggests workers need a stake of at least 30% to see transformative effects. This is how you close the racial wealth gap: not with rhetoric, but with equity.
The Great Wealth Transfer: New Investors for a New Economy
Just as business assets are changing hands, so too is investment capital. We are entering the "Great Wealth Transfer," where $124 trillion will pass to new generations by 2048. This shift is placing unprecedented economic power into the hands of women (whose assets are projected to triple to $30 trillion by 2030) and NextGen investors.
These new wealth holders are fundamentally different. Research shows they are far more likely to prioritize social impact and align their portfolios with their values. For women who built wealth through business or inherited it from family businesses, investing in employee ownership resonates deeply—it’s a way to honor the legacy of business creation while ensuring the next generation of workers can participate in that success.
A Bipartisan Solution in a Polarized World
In an era of deep political division, employee ownership stands out as a rare point of consensus. It polls with over 90% support from both Democrats and Republicans. Everyone agrees that we need to strengthen local economies, reward hard work, and broaden the base of capital ownership. This isn’t a partisan experiment; it is a pragmatic, universally supported solution waiting to be funded.
Capital Decides the Winner
So, if employee ownership is so superior, why isn't it happening automatically? Because capital is the gatekeeper. Private Equity* firms are sitting on massive piles of "dry powder"—cash ready to deploy at a moment's notice. Private equity buyouts represent a $3.6 trillion juggernaut. By contrast, the entire employee ownership investment field holds roughly $500 million in assets.
“Private equity buyouts represent a $3.6 trillion juggernaut. By contrast, the entire employee ownership investment field holds roughly $500 million in assets. That is a 7,000-to-1 mismatch.”
That is a 7,000-to-1 mismatch. Workers rarely have the capital to buy out an owner, and traditional banks are often too rigid or risk-averse to finance these transitions without personal guarantees, even for longstanding, profitable businesses. The result is a massive market failure in which the extractive option is easy and fully funded, while the productive option is hard and starved of capital.
This is where investors must decide which side of history they want to be on. Capital is the catalyst that makes these transitions possible, or the restrictor that makes them impossible. At the Delta Fund, we refuse to watch from the sidelines as our communities are hollowed out. But this challenge is too significant for any single fund to solve. We need a fundamental shift in how wealth holders deploy their resources.
Putting Our Money Where Our Mouth Is: A Call to Capital
We cannot grant-make our way out of a structural ownership crisis. We need investment capital. This is a direct challenge to every holder of capital, from Foundations to DAFs, from Family Offices to individuals, to move from passive observation to active construction.
“We cannot grant-make our way out of a structural ownership crisis. We need investment capital. This is a direct challenge to every holder of capital, from Foundations to DAFs, from Family Offices to individuals, to move from passive observation to active construction.”
For Foundations: Align the 95%. It is a moral contradiction to use 5% of your assets to fight poverty while the other 95% of your endowment is invested in the very private equity firms that are creating it through wage suppression and layoffs. You have the power to make Program-Related Investments (PRIs) and Mission-Related Investments (MRIs). Move your corpus. Invest directly in funds like Apis & Heritage or Project Equity. Stop treating your endowment as a hoard to be protected and start treating it as a lever to be pulled.
For DAF Holders: Unlock Your Capital. There is over $300 billion sitting in Donor-Advised Funds, largely idle. This capital has already been tax-deducted; it belongs to the public good. Yet, it sits in mutual funds, funding the status quo. This is why we launched Unlock Ownership. It is a Multi-Donor Fund designed to be the "easy button" for DAFs and foundations to deploy catalytic capital. We aggregate these resources to fund specialized infrastructure for employee ownership transitions. We de-risk the deals for workers and provide a viable exit for owners who want to do the right thing.
For Family Offices: Choose Legacy Over Looting. You understand that building a business takes generations of sweat and integrity. Why, then, would you allocate your private equity portfolio to firms that strip-mine those very businesses? You have the flexibility to invest in the "Real Economy." By allocating capital to Employee Ownership funds, you can generate durable, non-correlated returns while preserving the fabric of American business. This is the ultimate legacy play: using your wealth to ensure Main Street's survival.
For Individuals: Find The Gems. While much of the available investment in employee ownership is allocated to private investors, a growing number of organizations, such as Boston Impact Initiative, are creating opportunities for all types of investors to invest in this powerful work. We need more.
The "Silver Tsunami" is coming. We can let it wash away our local economies, leaving behind a landscape of corporate chains and hollowed-out towns. Or we can ride the wave, using this moment to build an economy rooted in shared prosperity, durability, and justice.
The assets are for sale. The choice of who buys them is up to us. Join us.
Katie Boland invests to advance racial equity, financial inclusion, and shared ownership through the lens of a well being economy. She is a co-founder of Unlock Ownership (www.unlockownership.org) with Deborah Frieze and Brian Boland.
*Note: It's important to distinguish between the 'private equity' model used by firms like Apis & Heritage and the predatory version we often critique. While both use debt to acquire companies, the difference lies in who that debt serves. In a traditional PE buyout, debt is used to extract cash from distant shareholders while stripping the company of assets. In the Apis & Heritage model, debt serves as a bridge to worker ownership. It is used to buy out the retiring owner, but as the company pays it down through its own profits, that equity value transfers directly to the employees' retirement accounts—not to a Wall Street firm. One model uses leverage to loot; the other uses it to liberate. In the buy-out private equity model, the business is barely or not at all employee-owned in the long term, while the other model has robust employee ownership as the goal for the future.