Executive Summary: Four North Carolina-based employee-owned companies expanded this summer, not by going public or bringing in outside investors, but by acquiring other businesses and rolling those employees into their existing ownership structures. It’s a growth pattern worth understanding, whether you’re weighing an exit or advising someone who is.
The conversation around expanding employee ownership typically focuses on non-employee-owned companies converting to an employee ownership structure. Another way that employee ownership expands, though, is when employee-owned companies make acquisitions, and these new employees become owners.
Four Deals, One Pattern
ECMD, a North Wilkesboro-based molding and building products distributor, has been 100% employee-owned since 2021. Since becoming an ESOP, ECMD has acquired three companies Clifton Moulding, Madison Lumber, and Falls City Lumber. Each case provided a way for ECMD to extend its geographic reach. ECMD being a 100% ESOP company was a differentiator in each transaction. The idea that their employees could become shareholders within 6 months of acquisition set ECMD apart from other potential acquirers.
Columbia Forest Products, a Greensboro-based hardwood plywood and veneer manufacturer, has been 100% employee-owned since 1976. In June 2026, it acquired PRO Pallet LLC, a Pennsylvania-based pallet manufacturer and recycler with operations in Dover, York, and Harrisburg. It was Columbia’s second pallet-industry acquisition, following its 2022 purchase of JC Pallet in Virginia and North Carolina (see our blog post!). Columbia’s leadership described the deal as a way to strengthen its position in the wood pallet and packaging market while extending employee ownership to a new group of workers.
McKim & Creed, a Raleigh-based, employee-owned engineering, planning, and geospatial services firm, acquired Davis • Martin • Powell (DMP) in June 2026. DMP is a 46-person engineering and surveying firm with offices in High Point and Winston-Salem that had operated independently for six decades. Its team is now part of a company with more than 1,100 employee-owners across the Mid-Atlantic and Southeast.
Hoffman & Hoffman, a Greensboro-based, employee-owned HVAC manufacturers’ representative founded in 1947, used an acquisition to enter an entirely new market. Its purchase of Aeromechanical LLC, based in Gulf Breeze, Florida, marked the company’s first expansion into Florida and the Gulf Coast.
Four different industries. Four different reasons for the deal. Same underlying mechanism: an existing ESOP grows by bringing a new company’s employees into ownership.
Why This Growth Pattern Matters
The number of ESOPs nationally hasn’t expanded as quickly as many in the employee-ownership community would like to see. But that statistic tells only part of the story. Acquisitions like these show a second, less-discussed path to growth: expanding the number of individual employee-owners, even when the number of ESOP companies stays roughly flat.
For the employees joining DMP, PRO Pallet, or Aeromechanical, this isn’t an abstract policy trend. Employees now have a powerful wealth-building tool: an ownership stake. Additionally, research from the National Center for Employee Ownership (NCEO) has found that employee-owned companies tend to offer stronger wages and retirement benefits than comparable firms — meaning these acquisitions can translate into real financial upside for workers who didn’t choose employee ownership themselves, but inherited it through a deal.
How These Companies Can Afford to Grow This Way
There’s a financing detail behind many of these deals that’s worth understanding, especially if you’re an advisor. Companies structured as S corporation ESOPs don’t pay federal or state income tax on the share of profit attributable to the ESOP trust’s ownership stake. Early on, that advantage is often offset by the debt a company takes on to fund the original ESOP transaction. But once that conversion debt is paid down, the tax savings become available cash — and some employee-owned companies are choosing to reinvest that cash into acquisitions rather than distribute it elsewhere.
This is one reason a mature ESOP can be a more active acquirer than people expect. It’s not just an ownership structure; it can become a growth engine.
What This Means If You’re Considering an Exit
If you’re a business owner thinking about your own exit, these deals are a useful reminder that employee ownership isn’t only a story about your company converting to an ESOP. Selling to an established, employee-owned company like ECMD, Columbia, McKim & Creed, or Hoffman & Hoffman is itself a form of employee ownership transition — one where your employees may end up with a stake in the combined business, and your legacy continues inside a company built around a similar philosophy.
It’s not the right fit for every business or every owner. But for those who value keeping jobs intact and want a buyer whose culture already reflects employee ownership, it’s an option worth understanding alongside a traditional conversion to an ESOP, an Employee Ownership Trust, or a worker cooperative structure. The National Center for Employee Ownership (NCEO) has a directory of ESOP companies looking to acquire businesses. You can filter and find businesses in your industry. NCEO Directory.
Frequently Asked Questions
What does it mean when an ESOP “acquires” another company? When an ESOP-owned company buys another business, the acquired company’s employees typically become eligible to join the acquiring company’s existing employee stock ownership plan, usually after meeting standard eligibility requirements like a minimum length of service. This is different from starting a new ESOP — it’s an established employee ownership structure expanding to include a new group of employees. For the acquired company’s workforce, it means moving from either private or family ownership into a structure where they build an ownership stake in the combined business over time, without having to fund a buy-in themselves.
Is the number of ESOPs in the U.S. actually growing? The number of new ESOPs formed each year hasn’t kept pace with awareness of employee ownership as an exit option, and total ESOP company counts have grown slowly. However, acquisitions by existing ESOPs are expanding the number of individual employee-owners even when the count of ESOP companies stays relatively flat. Four North Carolina examples — ECMD Inc, Columbia Forest Products, McKim & Creed, and Hoffman & Hoffman — each brought new employees into ownership this way, illustrating a growth path that doesn’t always show up in company-count statistics.
Why would a business owner sell to an employee-owned company instead of converting their own business to an ESOP? Converting your own company to an ESOP requires a valuation, financing structure, and multi-month process, and it works best for companies that meet certain size and profitability thresholds. Selling to an already employee-owned acquirer can be a simpler transaction for some owners, while still delivering many of the outcomes they care about: job preservation, continuity for customers, and a buyer whose culture is built around treating employees as owners. It’s a different mechanism for reaching a similar goal, and the right choice depends on the owner’s timeline, company size, and priorities.
How does an S corporation ESOP afford to make acquisitions? S corporation ESOPs don’t pay federal or state income tax on the percentage of company profit attributable to the ESOP trust’s ownership share. In the years immediately after an ESOP transaction, much of that advantage typically goes toward paying down the debt used to fund the original sale. Once that conversion debt is retired, the tax savings become available cash that some companies choose to reinvest in growth, including acquisitions. This is one reason mature ESOPs can become active, well-capitalized buyers in their industries.
Do employees at acquired companies actually benefit financially from joining an ESOP? Employees now have a powerful wealth-building tool: an ownership stake. Additionally, research from the National Center for Employee Ownership has found that employee-owned companies often provide better wages and retirement benefits compared to similar non-employee-owned firms. Employees joining an ESOP through an acquisition don’t have to make an upfront investment — shares are typically allocated to their accounts over time based on factors like compensation or tenure, as part of their overall compensation and retirement benefits.
Key Takeaways
- Four North Carolina-based ESOPs — ECMD Inc., Columbia Forest Products, McKim & Creed, and Hoffman & Hoffman — each expanded in by acquiring other businesses and rolling the acquired employees into their existing employee stock ownership plans.
- While the total number of ESOP companies nationally hasn’t grown quickly, acquisitions like these are expanding the number of individual employee-owners, even without an increase in the number of ESOP companies overall.
- Research from the National Center for Employee Ownership (NCEO) indicates employee-owned companies often provide stronger wages and retirement benefits than comparable firms, a potential upside for employees who join ownership through an acquisition.
- S corporation ESOPs pay no federal income tax on the ESOP trust’s share of company profit; once original conversion debt is paid off, that tax savings can free up cash that some companies reinvest into acquisitions.
- Selling your business to an already employee-owned company is a separate path to preserving jobs and legacy, distinct from converting your own company to an ESOP, EOT, or cooperative.
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