An Accute Problem for Maine Business Owners
Maine has the oldest population in the country, and that fact ripples into every corner of the state’s economy. Research from the University of Maine School of Business estimated that approximately 12,790 small businesses in Maine, employing around 108,000 workers, are owned by someone who wants to retire in the next several years.1
In rural parts of Maine, the loss of small businesses can have an outsize effect. When a grocery store or hardware store closes, there may not be another one for 20 miles. The business closing isn’t just a financial event, it changes the viability of the surrounding community.
Businesses in Maine, as in many rural areas of the country, have long been built around ‘owner-operators’, not just owners. When an owner is in the mindset that they themselves are the core of the business, they often haven’t kept a financial history that can easily reflect the value of the business, or designed systems that allow for a more hands-off owner to envision stepping in.
Common Paths Forward
Path 1: Transferring to a Family Member
This is what most owners hope for. A 2023 PricewaterhouseCoopers study found that 72 percent of business owners want their business to stay in the family.2 The reality is harder: only about 15 to 19 percent of family transfers are actually successful, and the number has been declining.3
The families that get this right typically start the conversation three to five years before any planned transition date. Sorting out who owns what, who controls what, and how the financial terms work takes time, especially when you’re also still running the business. However, even with the best advanced planning, a business can only be passed on to family members who want to take on ownership, and this is where small businesses that are tied to rural communities, and to intense owner involvement, tend to suffer.
Path 2: Selling to a Third Party
If family succession isn’t the right fit, selling to an outside buyer is the most common alternative. The data here is sobering: only about 20 percent of businesses listed for sale actually sell to a new owner.4 The smaller and more rural the business, the lower that number gets.
That doesn’t mean selling is unlikely for your business. It means most owners list their businesses without doing the preparation work that makes a sale possible. A buyer, whether an individual, a competitor, or a private equity group, is buying your future cash flows. If your books are a mess, your key relationships are all in your head, and your contracts are undocumented, you are selling uncertainty. Buyers discount uncertainty heavily, or walk away entirely.
Preparation for a third-party sale typically involves three parallel tracks. The first is financial cleanup: getting three to five years of clean financials, separating personal expenses from business expenses, and having a credible valuation in hand. The second is operational documentation: making sure the business can run without you, key customer relationships are transferable, and major contracts are assignable. The third is legal due diligence readiness: organizing your corporate records, confirming your entity is in good standing with the Maine Secretary of State, and identifying any pending disputes or encumbrances on assets.
Path 3: Selling to Your Employees
This path is often overlooked, and it’s consistently the most underutilized option available to Maine business owners. It’s also, in many cases, the one that produces the best outcomes for everyone involved.
There are two main structures for employee ownership transitions. An Employee Stock Ownership Plan, or ESOP, is a qualified benefit plan through which employees gradually acquire ownership of the company through a benefit trust. A worker cooperative is a structure where employees directly own and govern the business as member-owners. Both structures are available under Maine law.
The success rate for well-planned employee buyouts is dramatically higher than third-party sales – surveys put it at approximately 80 percent.5 The reason isn’t magic. It’s motivation. The workers whose jobs are at stake are also the people most invested in keeping the business alive. They know the customers, the suppliers, the rhythms of the operation. A motivated employee ownership group is a better bet than a motivated outside buyer who is still learning the business.
For the selling owner, employee buyouts can provide a continuing income stream through seller financing or an ESOP note, a structured tax-advantaged exit in certain cases, and the knowledge that the business and its employees will be taken care of. For the employees, it means ownership stakes that build real household wealth over time.
Maine has real-world examples of this working. On Deer Isle, employees of three retail businesses (Burnt Cove Market, the Galley Market, and V&S Variety) formed the Island Employee Cooperative to buy the stores when the owners announced plans to retire. It’s now one of the island’s largest year-round employers and the largest worker cooperative in Maine.6 In Rockland, Rock City Café and Coffee Roasters transitioned to employee ownership when the founding owner wanted to retire, allowing longtime workers to become owners while providing the founder with a continuing income stream.
Resources Available to Maine Business Owners
Maine has a developed ecosystem of organizations that support business succession planning, particularly for transitions to employee ownership. The Cooperative Development Institute (CDI), the USDA-designated Cooperative Business Development Center for the Northeast, provides technical assistance to business owners and employees exploring employee ownership transitions. Maine’s Small Business Development Centers (SBDCs) are required by federal law to offer services supporting employee ownership transitions, including ESOP and worker cooperative feasibility. The Institute for Family-Owned Business, based in Portland, offers workshops and consulting specifically for family succession planning. [VERIFY: confirm current program availability and contact information for CDI Maine, Maine SBDC network, and Institute for Family-Owned Business as of 2026]
These organizations are not substitutes for legal representation in a transaction. They are excellent starting points for education and planning. Once you’re at the point of structuring and executing a deal, you need an attorney who knows Maine business law and who has experience with the specific transaction type you’re pursuing.
- University of Maine School of Business, Succession Planning and the Entrepreneurial Exit, Presentation for the Maine Chamber of Commerce (Apr. 8, 2021) (estimating 12,790 Maine small businesses employing approximately 108,000 workers are owned by individuals seeking to retire within the next several years). ↩
- PricewaterhouseCoopers, Global Family Business Survey (2023) (finding that 72 percent of family business owners want the business to remain in the family, but only 34 percent have a robust succession plan in place). [CITE-CHECK: confirm 2023 PWC Family Business Survey citation details] ↩
- Conway Center for Family Business, Family Business Facts (n.d.) (noting that successful transitions to the second generation have declined from approximately 30 percent to 19 percent in recent years). ↩
- Michelle Seiler Tucker, “Why 8 Out of 10 Businesses Don’t Sell,” Podcast (2020) (reporting that only approximately 20 percent of businesses listed for commercial sale successfully transfer to a new owner). ↩
- Rob Brown, “How to Save Jobs and Build Back Better: Employee Ownership Transitions as a Key to an Equitable Economic Recovery,” Maine Policy Review 30.2 (2021): 111–115 (citing survey data showing that approximately 80 percent of well-planned employee buyouts succeed). ↩
- Rob Brown, “Owning Maine’s Future: Fostering a Cooperative Economy in Maine,” Maine Policy Review 26.1 (2017): 23–34 (describing the formation of the Island Employee Cooperative on Deer Isle and its status as the largest worker cooperative in Maine). ↩
