Selling Your Business to Your Employees in New Jersey? The State Is Expanding Its Support

If selling your New Jersey business to employees has ever seemed too complicated or expensive to explore, New Jersey is making it easier to take a serious look at that option.

On September 4, 2026, Governor Mikie Sherrill signed S4218/A5016, expanding NJEDA’s existing ESOP Assistance Program. Here is what changed and what it could mean for business owners considering employee ownership.

Quick Answer: What Changed?

• More than ESOPs are covered: The expanded program covers worker cooperatives, employee ownership trusts, direct ownership, and other structures.

• Support can continue after the study: NJEDA can provide consultation to participating businesses that decide to move forward after completing a feasibility study.

• New financing is being added: The law creates a revolving loan fund for qualifying majority employee ownership transitions.

• Smaller businesses can get earlier help: Businesses with fewer than 20 employees may receive education and technical assistance.

New Jersey Was Already Helping Business Owners Explore ESOPs

In May 2025, NJEDA opened its ESOP Assistance Program, which is still available to qualifying New Jersey businesses. Through the program, NJEDA can cover 90% of the preapproved cost of an ESOP feasibility study, up to $35,000 per business.

These studies can look at practical questions such as:

• How much your business may be worth
• Whether its earnings can support an ESOP transaction
• Whether your current workforce and management structure are suitable
• What employee benefits are already in place
• How you might structure a sale to employees

The September 2026 legislation builds on that support and goes further than the original ESOP program.

What the New Law Adds

S4218/A5016 expands NJEDA’s existing ESOP assistance into a broader Employee Ownership Transition Program. Here is what each of those changes could mean if you are considering selling your business to your employees.

The State Program Now Covers More Than ESOPs

Until now, NJEDA’s assistance focused on one route to employee ownership: an ESOP. The expanded program gives New Jersey business owners support to assess other ways to give employees an ownership stake or a financial interest tied to the company’s value.

Those options can include:

• An ESOP
• A worker cooperative
• An employee ownership trust
• Direct employee ownership
• Other broad-based arrangements, including stock options, stock grants, and synthetic equity. Synthetic equity can provide financial benefits tied to share value without transferring actual shares.

Support Can Continue After the Feasibility Study

Under NJEDA’s existing ESOP program, the state helps cover the feasibility study, but businesses are responsible for the subsequent costs of carrying out its recommendations. The new law extends NJEDA’s role beyond that initial study.

S4218/A5016 directs NJEDA to provide consultation to participating businesses that complete a feasibility study and decide to pursue employee ownership.

New Jersey Is Creating Financing for the Transition

The new law also addresses one of the bigger questions that comes next: how do you pay for the transition?

S4218/A5016 creates an Employee Ownership Revolving Loan Fund through NJEDA. The fund is intended to provide low-interest loans to finance majority employee ownership transitions and certain transaction or post-transition costs that help the employee-owned business remain sustainable.

Businesses seeking this financing must first complete an employee ownership feasibility study.

Smaller Businesses Can Get Help Earlier

If your business has fewer than 20 full-time employees, you would not yet qualify for the program’s feasibility-study assistance.

But the new law specifically directs NJEDA to provide education, outreach, and early-stage technical assistance to smaller and start-up businesses, including those that may still be years away from a succession decision.

Could Your Business Qualify for NJEDA Assistance?

An eligible business must:

• Be located in New Jersey.
• Have at least 20 full-time employees when NJEDA approves your application.
• Provide a current New Jersey tax clearance certificate.
• Be in good standing with state agencies, including the Department of Labor and Workforce Development, the Department of Environmental Protection, and the Department of the Treasury.

Qualifying for assistance, however, does not necessarily mean selling to employees makes sense for your business. Ask yourself:

• Are you beginning to think about retirement, succession, or selling the business?
• Do you have an established workforce and management team that could help carry the company forward?
• Is your business financially stable enough to support an ownership transition?
• Do you want the company to continue after you step away?
• Do you have a family successor or outside buyer lined up?
• Would preserving your workforce, management team, or company culture matter after the sale?
• Would you be willing to remain involved for some part of the transition?

How Wilkinson Law Can Help With an Employee Ownership Transition

NJEDA can help with the feasibility process and, under the expanded program, provide additional assistance with a transition. But deciding that employee ownership is feasible is not the same as completing the sale.

If you decide to sell to your employees, Wilkinson Law LLC can help structure the transaction around your goals, prepare and negotiate the agreements, and guide the deal through closing.

Meet Our Business Attorneys

Anthony Wilkinson

Anthony Wilkinson works with New Jersey and New York business owners on the transactions and ownership decisions that shape where their companies go next. His work includes business financing, ownership arrangements, commercial agreements, and business sales.

As a longtime entrepreneur himself, Anthony also understands that selling a business is not simply about getting documents signed. The structure of the deal needs to make sense for what you want financially, how involved you want to remain, and what you want to happen to the business after the transition.

View Anthony's Bio

Daniel Bitonti

Daniel Bitonti brings more than two decades of legal experience to commercial agreements, ownership relationships, and business disputes.

He helps business owners understand the obligations and risks in their agreements and address problems when a transaction or business relationship does not develop as expected

View Daniel's Bio

Contact Us

If you are considering selling your New Jersey business to your employees, contact Wilkinson Law LLC at info@wilkinsonlawllc.com or (732) 410-7595 to discuss the transaction.

At Wilkinson Law, we give business owners the clarity they need to fund, grow, protect, and sell their businesses. We are trustworthy business advisors keeping your business on TRACK: Trustworthy. Reliable. Available. Caring. Knowledgeable.®