A new company says it has found an alternative to selling America’s retiring small businesses to private equity firms.
Traditionally, owners pass businesses to family, sell them, or close them. American Operator is pitching a fourth option: helping employees or industry veterans buy them instead.
According to founder William Fry, small businesses employ roughly 62 million Americans, account for about 43% of U.S. GDP, and create two out of three jobs. With more than half of U.S. small business owners nearing retirement and fewer children interested in taking over family businesses, Fry says the country is approaching a massive small-business ownership transition.
Fry launched American Operator late last year to give sellers an alternative option. The firm helps operators, who are sometimes current employees or veterans of the industry, co-purchase a retiring owner’s business. It starts with 10% equity and a planned path to 70% majority ownership.
American Operator is distinguishing itself from private equity by keeping businesses small and avoiding reselling other PE operations, which often are not well-versed in the specific industry. It does so using an Operate-To-Own model.
“You need to know how an industry works and then we handle the acquisition,” Fry said of the process. The retiring owners often join American Operator’s advisory council after the sale, meaning they keep a hand in the continued success of the business they built.
“We view our mission as a fight to preserve the American Dream, populist capitalism, and a local ownership. We do not want a world where everything is a big box retailer or a Private Equity-owned outpost,” Fry told The Daily Wire.
Fry pointed to the veterinary industry as a negative example of what private-equity consolidation can do. A Bank of America study has tied PE-backed consolidators to sharp increases in veterinary prices since 2020, alongside a decline in visits as pet owners priced out of care.
Fry acknowledged that his company is no match for PE capital-wise, but said those retirees are choosing to entrust their business to an individual who will keep it running in a similar way to how it was before.
One completed American Operator deal involves Anne the Plumber, a residential plumbing company that has served Rhode Island since 2014, as reported by The New York Post. Rather than sell to an outside buyer, founder Anne-Marie Rosario Flores transferred control to Wilson Molina, an operator she had mentored, with backing from American Operator’s capital. Molina now serves as CEO with a path to majority ownership. Flores is still involved with the business.
The company has completed 95 deals totaling roughly $300 million to date. Fry said he eventually hopes to combine the businesses into a publicly traded holding company that would allow everyday investors to buy into a portfolio of Main Street businesses.
“Our mission statement is to revive the American Dream,” Fry said. “Whether that’s ensuring a small business owner receives fair value for their life’s work or a new entrepreneur gets a chance to become a millionaire, our model is focused on advancing wealth on Main Street and making sure the broader public knows that hard work still matters in this country.”
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