ESOP attorneys see steady work, more M&A deals

As companies with employee stock ownership plans become more commonplace nationally, attorneys are seeing more and more interest in mergers and acquisitions involving ESOPs.

It’s become a hot topic in M&A circles, with Faegre Drinker Biddle & Reath devoting a panel discussion at its May conference in Indianapolis to “ESOPs in the M&A Context.”

Philip Gutwein, a Faegre Drinker partner, participated in that discussion.

Gutwein said deals involving ESOPs have become more desirable in recent years, with ESOP-owned companies representing a growing market opportunity.

He said there are in the neighborhood of 7,000 U.S. companies that maintain stock ownership plans for their employees.

“For years and years, that number has remained absolutely steady,” Gutwein said, with a mix of newly established ESOPs balanced with companies terminating their plans.

The National Center for Employee Ownership estimated that as of 2025, there are 6,548 employee stock ownership plans at 6,358 companies, covering 14.9 million participants and holding over $1.8 trillion in assets.

The largest U.S. company, in terms of employees, with an ESOP is Publix Super Markets, the center noted in its 2024 Employee Ownership 100 list.

The U.S. Department of Labor describes ESOPs as federally regulated retirement benefit plans that are managed by plan fiduciaries who must administer them prudently and with undivided loyalty to the plan, its participants, and beneficiaries. 

According to DOL, that means that the fiduciaries must act solely in the interests of the plan, its participants and beneficiaries. In an ESOP, the owner of the company sells all or a portion of the shares of the company to the ESOP, and the employees of the company who participate in the ESOP have an ownership stake in the company.

Matt Secrist, a Taft Stettinius & Hollister LLP partner, said he has been a traditional Employee Retirement Income Security Act (ERISA) benefits attorney who has gradually become involved with ESOPs.

Secrist acknowledged he is “biased” about the virtues of the plans and how M&A deals involving ESOPs can benefit buyers and sellers.

“They allow you to keep your culture as far as governance of the company,” Secrist said..

Interest in ESOP deals high in 2024, 2025

The National Center for Employee Ownership conducted a comprehensive company-by-company search for acquisitions by ESOP companies from 2020 through 2024.

It identified 827 acquisitions by the largest 1,000 ESOP companies during that time period. The acquisitions amounted to approximately 72,000 new employees who became employees of the ESOP acquirer. 

Michael Nader, a partner in Barnes & Thornburg’s Fort Wayne office and an adjunct professor at Notre Dame Law School, said even with the 2024 presidential election, tariffs, higher interest rates and world events, the interest in ESOPs and the number of ESOP transactions has generally remained consistent over the prior year.  

“Indeed, uncertain times often causes owners of privately-held businesses to consider diversifying their investment assets, including ownership in the company.  An ESOP provides a method to effectuate the diversification of assets. So, even in troubled times, interest in ESOPs remains high,” Nader said.

Nader said ESOPs are attracting more companies that are interested in selling or being acquired for a number of different reasons.

He said owners of privately held companies view ESOPs as a way to continue their legacy, share the benefits of ownership with their employees and receive tax benefits under the Internal Revenue Code.  

Nader said interest in ESOPs has remained strong over the years, regardless of the political party in control of Congress or the presidency, with more ESOP-owned companies sold to third parties

Alex Mounts, a Krieg DeVault partner and employee stock ownership and executive compensation attorney, said ESOP deal activity had dipped a little the last couple of years but has surged in the latter half of 2024 and first part of 2025.

“I would definitely say in the past 12 months, I’ve seen a very noticeable uptick,” Mounts said.

Right now, Mounts said he is working on five different transactions, including three involving an ESOP company purchasing another ESOP.

Mounts said there’s been a fair amount of national publicity regarding these types of deals and companies that are establishing or promoting ESOPs. 

He noted the national accounting firm BDO announced in 2023 it would be putting a plan in place for its employees.

Also, Mounts said Pete Stavros, a high-ranking executive at private-equity firm KKR & Co. Inc. has been vocal about the henefits of employee ownership and launched an organization last year aimed at promoting ESOPs.

MarketWatch reported the group, Expanding ESOPs, has the backing of more than 50 banks, law firms, academic groups and foundations including Wells Fargo & Co, The Ford Foundation, Holland & Knight, UBS, BMO, The Bipartisan Policy Center, Kirkland & Ellis and Project Equity.

What does 2026 look like?

Most attorneys involved with ESOP deals expect the steady activity to continue through the rest of 2025 and into 2026.

Mounts said he feels there’s a lot of momentum for deals right now. He noted that in addition to other deals he’s working on, he has a transaction involving an ESOP that wants to acquire another ESOP where he hasn’t sent the engagement letter out yet.

Some baby boomers looking to sell their businesses find ESOP companies to be a good landing spot for their companies, Mounts said.

Gutwein said he continues to see ESOP companies interested in selling.

Nader said his office has done a significant number of ESOP deals, including the sale of several ESOP-owned companies, in the first half of 2025.  

“I see no reason why this trend won’t continue through 2026, and beyond,” Nader said.

Secrist said he’s been working on one-to-two ESOP-related deals a month.

“It’s picked up. It feels like it,” Secrist said.

ESOP transactions can take a little longer than more conventional M&A deals, Secrist said, with some taking a year or more.

He said the middle of September and end of the year are two particularly busy times of the year to close on deals.•