ESOP Radio

Top 10 ESOP Predictions for 2026

• Menke • Season 1 • Episode 14

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As we begin 2026, what’s ahead for the ESOP market?

In this episode of ESOP Radio, Trevor Gilmore and Ben Spade share their Top 10 predictions for the year — from AI-driven owner awareness to partial liquidity strategies, private equity exits, lending trends, and the growing premium on employee ownership culture.

In this episode:

  • Why AI and online tools will accelerate ESOP education
  • The continued rise of partial ESOPs for Gen X owners
  • Private equity firms exploring ESOPs as an exit strategy
  • Increased bank appetite for ESOP financing
  • Employee demand for ownership as a recruiting advantage
  • The possibility of the first cannabis ESOP
  • Bipartisan legislative momentum
  • Why ESOPs are shifting from “last resort” to strategic tool

ESOPs are no longer niche. They’re becoming a mainstream succession and competitive strategy.

Considering an ESOP? Request a confidential preliminary feasibility review at Menke.com.

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Speaker:

Hi, everyone. Welcome to ESOP Radio. I'm Trevor Gilmore and I'm Ben Spadt. And as we kick off the new year, let's share our own top ten predictions for the ESOP market in 2026. Trevor, what's your top five? Yeah. Thanks, Ben. And I think about 2026 and the trends we see out there, technology companies that we do business with, you know, so on general economy, what do I predict this year? So here are my top five. Number one, I predict I will increase the use of awareness as a tool for business owners. And what I mean by that is you have ChatGPT of Claude etc. out there, a lot of data already on valuation multiples. What the ESOP option looks like and so on. So I fully expect more and more business owners will be using that and getting educated before going down the path. Number two, more companies owned by Gen Xers will use partial esops for liquidity. Been seeing this a lot with our client base past couple of years. Younger owners wanting to sell partially to these that I've meaning you know, less than 50% get some cash out reward and incentivize all employees. I don't expect that trend to slow down. I think it will increase. People are very intentional about what they want for the future, for themselves and for their company. And number three, I predict more PE companies will look at Esops to offload their portfolio companies private equity companies are sitting on so many portfolio companies. And last couple of years I've had a lot of discussions with PE funds saying, hey, let's take a look and see what the Esop option looks like. Big issues. There are value structure and financing to make the whole thing work as a viable exit tool. Number four, I expect to see more banks lending money to Esops. A lot of the big banks out there, and even small regional banks really want to lend to high quality Esop companies. We get calls all day long from banks in Haiti of deals for us to look at. So I think that will be a net positive for the industry, meaning more capital to help these deals go through. Number five, I expect to see an increased demand from employees for employee ownership as more employees are out there to create nice Esop account balances and having skin in the game. They talk to their friends, their family, etc. and they spread the word. So I expect to see a lot of employees say, hey, I want to work for Esop owned company and maybe there's a bit of a premium there. Right. If you're an ace up own company. Yeah. So that's my top five. There have been and it's going to kick it over to you. What do you predict this year. Yeah Trevor those are great. And they're pretty wide ranging I think that, you know, you touch on all aspects of of where esops come into play. And there are some pretty interesting trends. For me, mine's kind of broken up into two hot takes and then, three maybe trends that I see. So the first two are number one. We'll see our first cannabis company, Esop, in 2026. I just think with, you know, changes in regulation federally, as well as the prevalence of states that do have legal cannabis dispensaries, growers, etc.. It's just bound to happen. I don't know when or you know, what a company would look like that would make a good candidate. But I just feel that our first cannabis company will become an Esop in in this year. Number two, we'll have, the perfect storm of baby boomers, Gen Xers leaving, either in part or in full, the businesses that they started. Kind of touching on your point about Gen Xers earlier, but we'll also see some more pro Esop legislation, perhaps around what is fair market value for these transactions, you know, perhaps about can we offer incentives to sell to your employees? Some states are already doing that. But, you know, there might be a larger push federally because esops are, by and large, are bipartisan. Tool and they get bipartisan support. Number three, I think as companies, you know, that's architecture, construction and engineering, those companies will continue to lead the charge and implementation of Esops. We see more and more that those companies are ripe for, this type of, long term employee benefit that, the makeup and the, the culture in those companies seem to seem to lend themselves well alongside the financial aspects. Number four, I think building an ownership culture before implementing an Esop will become more commonplace. We're seeing a lot of companies implement things like iOS or some type of, either entrepreneurial, mindset or ownership mindset to engage and empower the workforce. And an Esop is a tremendous tool that can be sort of icing on the cake there once everybody's rowing in the same direction. And then finally, number five, I think Esops will no longer be seen as a last resort. You know, a lot of times they got, kind of shoved off in the corner and just saying, you know, it's not what you want if you can't find a buyer. If otherwise, you're just going to shutter your doors. You know, perhaps an esops are good option. I think they'll become more a strategic tool for competitive advantage, not only as an exit strategy. Leaving a legacy, but, you know, keeping your company in the town that it exists. A competitor's not coming in and just sweeping up that market. And sweeping up that market and implementing their own policies, strategies, whatever cost cutting measures. So it's a it's a tool to stay in your market. And then also to, attract and retain talent. And in terms of it, employee is, I think, kind of, touching on your point a little bit about the employee demand, more and more employees are seeing what a big benefit that this can be. What a meaningful benefit. And I think that's, that's going to be one of the biggest trends in 2026. So, Trevor, that's that's what I've got. And that makes our top ten. What do you think about that? Awesome. Ben, I totally agree with you. I think we'll see a cannabis Esop out there. So 2026, let's see what happens, right? That one and a half more months ago here. And, you know, your last one there about, your company's being more attention and employee ownership. You know, and culture and so on. Employee ownership mindset, right? Skin in the game, all that good stuff. It's kind of dovetails with the trend we're seeing here is companies that actually are proud to be up. Right. And, you know, in the past and companies highlight the fact that they were maybe maybe not. Right. You know, but companies now are very much given the message front and center. Hey, we're Esop owned, give you skin in the game. Right. And it's almost becoming sort of like a premium experience with an employer to be part of an Esop, right? You know, compared to some company that isn't. So, you know, I bet branding and so on. I think we'll see more of that, you know, kind of a premium applied to Esop owned companies and especially, you know, with employees. Right. See they who don't want to work for, you know, We’re an Esop as well. You know here at Menke if we sell them you know we're Esop. You know we truly live and breathe it. Thanks everyone for joining us today. Have a great happy New Year. Talk soon.