Tennessee's Business Assistance Program for
Employee Ownership
Helping Tennessee businesses explore succession and ownership transition options
Considering the future of your business?
Employee ownership may offer a way to preserve your legacy, provide continuity for employees, and keep your business rooted in your community.
The Tennessee Center for Employee Ownership (TNCEO) is launching a new program to help eligible Tennessee businesses evaluate whether an Employee Stock Ownership Plan (ESOP) is a viable business succession strategy.
Made possible through a $500,000 grant from the Tennessee Department of Economic and Community Development (TNECD), the program will provide technical assistance funding to eligible businesses over the next three years.
Eligible businesses may be reimbursed 50% of the costs associated with ESOP feasibility and transaction, up to $25,000 per business.
Applications are expected to open in early Q1 2027.
About the Program
As business owners across Tennessee consider succession and the future of their companies, employee ownership offers an alternative to selling to an outside buyer.
An Employee Stock Ownership Plan (ESOP) can help preserve business legacies, keep jobs rooted in local communities, and create opportunities for employees to build wealth.
But determining whether an ESOP is the right fit requires specialized financial and legal expertise. The cost of evaluating a potential transition can be a barrier for some business owners.
The Tennessee Employee Ownership Business Assistance Program helps reduce that barrier by providing funding for professional ESOP feasibility studies and transaction support, giving business owners access to the expertise they need to make informed decisions about the future of their companies.
The program is administered by TNCEO and made possible through funding from TNECD.
Program At-A-Glance
The program helps eligible businesses access specialized professional services to determine whether an ESOP is a viable ownership transition strategy.
01
Express Interest & Apply
Learn more about the program, and discuss your goals for ownership transition. Complete the Interest Form to get started with TNCEO.
Once applications open, eligible businesses can apply for financial assistance to subsidize the cost of ESOP viability, feasibility and/or transaction.
02
ESOP Viability
Discover whether an ESOP could be right for your business. Evaluate an ESOP alongside other ownership transition options, and choose the best path for you and your business.
03
ESOP Feasibility
Complete an ESOP feasibility study. Conducted by a qualified ESOP provider, a feasibility study provides owners with everything they need to make an informed decision before committing to an ESOP transaction.
04
ESOP Transaction
For businesses that decide to pursue an ESOP, business assistance may be available to subsidize costs associated with an ESOP transaction.
Who is Eligible?
This Program is for Tennessee businesses interested in exploring employee ownership as a potential succession or ownership transition strategy. Businesses that are viable ESOP candidates and are planning to complete an ownership transition by September 2029 will receive prioritized assistance.
Is Your Business a Potential ESOP Candidate?
ESOPs are generally most suitable for established businesses with:
- A history of stable financial performance and sufficient cash flow
- A workforce large enough to support the costs and administration of an ESOP (usually, but not always, 20 or more employees)
- Owners interested in exploring a partial or full ownership transition, ideally by September 2029
- A leadership team and/or key personnel who can ensure business continuity when the owner(s) step away
Every business is different. Early ESOP viability exploration and an ESOP feasibility study can help determine whether the structure makes financial and operational sense.
Not sure whether an ESOP is right for your business? TNCEO can help you explore an ESOP alongside other employee ownership options and identify potential next steps for any path you choose.
Why Employee Ownership?
"Helping Tennessee businesses plan for the future is an important part of strengthening local economies, particularly in rural communities. Employee ownership is not the right fit for every business, but when it is, it can help preserve jobs, keep businesses rooted in their communities and give employees a stake in the value they help create.
Through this program, we are helping business owners access the expertise they need to determine whether an ESOP is the right path for their business and its future"
Stuart C. McWhorter
Deputy Governor and TNECD Commissioner
Program Process
Express Interest & Meet with TNCEO
Complete a brief interest form to tell us about your business and interest in employee ownership. You don't need a transition plan, and you don't need to know whether an ESOP is right for you.
TNCEO will follow up to schedule an introductory conversation to discuss your business, succession goals, timeline, and potential eligibility for the program. We'll help you understand your options, assess next steps, and connect you with relevant resources, including alternatives to an ESOP.
Completing the interest form ensures you'll be notified when applications open. We encourage you to connect with TNCEO even prior to the application process. It's never too early to take the first step toward planning your business's ownership transition.
Complete an application
Applications are anticipated to open early Q1 2027. Complete an Interest Form to be notified when applications open.
Businesses that meet preliminary eligibility requirements and appear ready for the program will be invited to submit a full application.
The application will request more detailed information about your business, including financial performance, ownership structure, transition goals, leadership team, and organizational readiness.
This information helps TNCEO assess your needs and determine which type of technical assistance may be appropriate. All information you provide to TNCEO will be kept strictly confidential.
Get Recommendations & Choose Your Path
We'll help identify the right next step.
TNCEO will review your application to determine program eligibility and readiness for technical assistance. For qualifying businesses, TNCEO will recommend one of three service pathways:
ESOP Viability: Explore whether an ESOP could be a viable ownership transition option alongside other alternatives.
ESOP Feasibility: Conduct a formal assessment of whether an ESOP transaction could work for your business.
ESOP Transaction: Access specialized professional services to support an ESOP transaction (for businesses that have already completed a qualifying feasibility study).
Your recommended pathway will depend on your company's goals, readiness, and progress in the ownership transition process.
Whether your business qualifies for the program or not, TNCEO is here to help you navigate what's next, and will make recommendations to help you get there.
Select a Service Provider
Once a service pathway has been recommended, your business will select a qualified ESOP service provider and work with them to develop a proposed scope of services and cost estimate.
TNCEO will provide a directory of qualified ESOP service providers for you to choose from. If you are already working with an ESOP service provider that is not included in the directory, they may apply to become an approved provider with TNCEO.
Submit the proposed services and costs to TNCEO for review and approval before beginning any reimbursable work.
Get Approved & Start Services
Get approval before proceeding.
TNCEO will review the proposed scope and costs. Once approved, your business will receive a written authorization outlining the approved services, reimbursement amount or limits, and applicable program conditions.
After receiving written approval, you can engage your selected provider and begin the authorized services.
Important: Services must be approved by TNCEO in advance to qualify for reimbursement.
Complete Services & Request Reimbursement
Once your approved services are completed and your business has paid the provider, submit the required documentation and proof of payment to TNCEO.
TNCEO will review your reimbursement request and reimburse eligible expenses according to the terms of your authorization.
Reimbursement amounts depend on the type of assistance approved and applicable program requirements.
Frequently Asked Questions
What is an ESOP?
An Employee Stock Ownership Plan (ESOP) is a qualified retirement plan that holds company stock on behalf of employees. An ESOP can allow business owners to sell some or all of their company to an employee ownership trust, creating a retirement benefit for participating employees. Owners get a fair market buy-out, and employees earn shares at no cost to them.
What is an ESOP feasibility study?
An ESOP feasibility study is a professional analysis that helps business owners determine whether an ESOP transaction is financially and operationally viable.
It typically examines company financial performance, valuation considerations, potential transaction structures, financing options, and the implications of employee ownership for the business and its employees.
Does my business have to become employee-owned to participate?
No. The program is designed to help business owners evaluate whether an ESOP is a viable option. Completing a feasibility study does not obligate a business to pursue an ESOP transaction
What types of businesses are good candidates for an ESOP?
ESOPs are generally best suited for established businesses with stable financial performance, sufficient cash flow, and enough employees to support the ongoing administration of an ESOP (usually, 25 or more). The suitability of an ESOP depends on each business's circumstances.
Does completing the interest form guarantee funding?
No. The interest form helps TNCEO connect with interested businesses and communicate program updates. A separate application and approval process will be required to receive financial assistance.
When will applications open?
Applications are expected to open in early Q1 2027. Interested businesses can complete the interest form to receive updates when applications become available.
How much financial assistance is available?
A total of $425,000 in direct technical assistance is available to businesses over roughly 3 years. Eligible businesses may receive up to $25,000 each to offset the cost of ESOP exploration, feasibility, and transaction.
All funding is subject to application approval, program requirements, and availability.
What costs are eligible for reimbursement?
TNCEO will reimburse businesses for costs incurred to explore ESOP viability, conduct ESOP feasibility studies, and execute ESOP transactions. ESOP service providers and scope of services must be approved in advance by TNCEO to be eligible for reimbursement.
ESOP viability professional advising is reimbursable up to $2,500 per business. ESOP Feasibility Studies and ESOP transaction services (including advisory, valuation, trustee, and legal fees) are reimburseable at 50% of cost.
Total reimbursements will not exceed $25,000 per business.
Can I use my own ESOP advisor?
TNCEO will maintain a directory of qualified ESOP service providers, and connect participating businesses with them. Businesses may choose to use any service provider that has been approved by TNCEO.
Any established ESOP provider that is registered to conduct business in the state of Tennessee may apply to become a qualified service provider.
Can I be reimbursed for costs I've already incurred?
No. All costs associated with ESOP viability, feasibility, and transaction must be pre-approved by TNCEO. If your business is in the process of exploring or transitioning to an ESOP, future costs may still be eligible for reimbursement.
Businesses that have not yet completed an ESOP feasibility study may be eligible for reimbursement of 50% of the costs approved under this program. Businesses that have already completed an ESOP feasibility study, but have not completed an ESOP transaction may be eligible for reimbursement of 50% of the costs associated with ESOP transaction support that are approved under this program. Maximum reimbursement under this program is $25,000 per business.
Get in touch with TNCEO if your company is currently exploring an ESOP, and/or working with an ESOP service provider.
What if I am interested in employee ownership but unsure whether an ESOP is right for my business?
TNCEO helps Tennessee business owners learn about a range of employee ownership options, including ESOPs, worker cooperatives, and employee ownership trusts. We encourage you to connect with us even if you're just beginning to explore your options.
For ESOP Service Providers
TNCEO is identifying qualified ESOP service providers to support businesses participating in the Tennessee ESOP Technical Assistance Program.
We welcome interest from professionals with experience in ESOP advisory and related ESOP professional services.
Service providers interested in participating are encouraged to complete our service provider interest form.
Participation will be subject to program qualifications and selection procedures. Expressing interest does not guarantee selection or referrals.
