Newman’s Own Foundation CEO on steward ownership: succession when you don’t want to sell

While this moment represents a huge opportunity for buyers and investors, not every business owner wants, or has the opportunity, to sell. Many owners spent decades building their companies and bristle at the idea of selling to traditional private equity or a bigger company that could restructure their business, lay off employees, and jeopardize their legacy. 

Some businesses will pass down to family members, but the majority face closure and 27% of owners 55 and above are unsure of their succession planning.

A solution? Steward Ownership models which combine self-determination and purpose orientation. These allow companies to resist speculative takeover and embed mission and values for the benefit of employees, customers, and/or the broader community.

Take Rick Plympton and Mike Mandina, respectively former CEO and Founder of Rochester, N.Y.-based high precision optics company Optimax. Since the 1990s, Rick and Mike grew Optimax from 10 employees struggling to make payroll to 500 employees with ~20% annual revenue growth. When the time came to discuss succession, the pair agreed selling wasn’t an option—no matter the potential upside. 

“Mike and I grew up blue collar—we don’t need to make billions of dollars,” said Plympton. “We wanted to create a corporate structure where the company could continue to grow and create jobs here in our community.”

They chose to convert Optimax to an Employee Ownership Trust. In 2020, Rick and Mike donated 20% of their equity to the trust. Over time, Rick and Mike will sell their outstanding shares back to the company after which the trust will fully own Optimax. Optimax’s profits will then be shared with employees or reinvested to grow the business, ensuring jobs and opportunity remain within the Rochester area.

“In the first 30 years of Optimax, we did $500 million in revenue, and roughly half of that was shared with our workforce through salary, benefits, and bonuses … The janitor gets the same monthly bonus check as the president, and every employee has a pathway to becoming a millionaire if they work with us for 30 to 40 years,” said Plympton. “If we can get 10 or 20 more companies in the region to convert to employee ownership, we’ll change the financial dynamics of the entire community.”

As more and more business owners begin to explore what succession looks like for them–whether it’s around the corner, or still five or ten years away–many are looking for alternative approaches beyond traditional sale. While employee ownership was the right move for Optimax, others have embraced models which enable continuity and giving back, such as:

• Newman’s Own: Paul Newman had not yet won his 1987 Oscar for “The Color of Money” when he and his long-time friend A.E. Hotchner started selling salad dressing in 1982. From the beginning, Paul decided to give all the profits away to good causes. When he passed away in 2008, he gifted the food company to Newman’s Own Foundation, a move which caused a stir until the passage of the Philanthropic Enterprise Act in 2018. 
• Kensington Corridor Trust: In Philadelphia, PA, the neighborhood trust holds property and resources collectively. The neighborhood governs how the assets are used, maintaining local control in perpetuity while using profits for reinvestment. 
• The Walker Group: The Connecticut-based IT firm transitioned to a Perpetual Purpose Trust in 2023 to conserve its long-held mission of serving their people and community. Through the trust, they distribute half of their profits to good causes, and half to their employees.

While these models remain the exception not the rule in the US, more are following in Paul Newman, Rick Plympton, and Mike Mandina’s footsteps. Patagonia converted to a Perpetual Purpose Trust in September 2022, while Michael Bloomberg declared he would donate his shares of Bloomberg LP to a trust to finance Bloomberg Philanthropies in 2023.

Foundation-controlled enterprises are more common in Europe, with companies like Rolex, Bosch, Carlsberg, Lego, and Novo Nordisk paving the way. Thanks to the success of GLP-1 drugs, Novo Nordisk Foundation is now the largest foundation in the world. The second largest foundation? Tata Trusts which owns 66% of Tata Sons, the holding company that owns Tata Group–one of India’s largest and best-known business groups.

When you’ve spent decades building, your business is more than just the number of zeroes you can sell it for. Steward Ownership models give you options to pass on what you’ve built for the benefit of your employees, your community, and your legacy.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.