North Arrow ABA’s Jonathan Timm on picking an employee-ownership ESOP over a private equity sale, the Chief Clinical Officer he just named, and his Michigan bet.
Key Takeaways
- A deliberate rejection of the private equity playbook. North Arrow ABA has finished converting into a 100% employee-owned company through an employee stock ownership plan (ESOP), a structure founder Jonathan Timm believes is one of only two of its kind in ABA nationwide. Timm, who watched a former employer change under private equity, casts the move as a refusal of an exit model he says slowly wears down the values a clinician-led company is built on.
- A leadership change arrives with the deal. Sarah Rader is being promoted to Chief Clinical Officer, with Timm staying on as founder and board chair while stepping back from the top clinical role. He confirmed the succession on the record for the first time, calling it a plan years in the making rather than a product of the ownership change.
- Employee ownership is not the same as employee control. An ESOP gives employees equity, not votes, and Timm is unusually frank that North Arrow’s advisory committee and open books are choices the company makes, not features the structure requires. He treats that distinction as the difference between a culture and a legal form.
- The open question is durability. The few ABA providers that adopted ESOPs before North Arrow were mostly absorbed by private equity within a few years, which makes the model’s rarity as much a caution as an achievement. Timm’s hedge against that fate is a healthy balance sheet, a long runway, and a refusal to leave Northern Michigan.
The phrase Jonathan Timm keeps returning to, when he talks about the company he worked for before he built his own, is “the gradual entropy of values.” He was there before and after a private equity firm bought it. The change he remembers was gradual and cumulative: a growth plan scoped to one state became a plan for the whole country, and the things that got weighed in a meeting quietly rearranged themselves. “The values were different,” he told Acuity Media Network, “and not in a bad way, necessarily, just in a way that I wasn’t aligned anymore.”
That drift is why Timm started North Arrow ABA in Traverse City, Michigan, in 2020. The company built a reputation for clinical seriousness (it was the first ABA provider in Michigan to earn accreditation from the Autism Commission on Quality), and in late June it did something almost unheard of in applied behavior analysis: it finished converting itself into a 100% employee-owned company, selling the business into a trust that now holds it for its workers through an employee stock ownership plan, or ESOP. Private equity has done more to consolidate ABA than almost any other force in behavioral health, a shift Acuity has tracked from the field’s origins to its current investor era. Timm thinks North Arrow is one of only two employee-owned providers of its kind in the country. He is more interested in why that number is so small.
A Clinician’s Case Against Private Equity in ABA
Timm spent more than a decade as a board certified behavior analyst (BCBA) before he founded anything, moving through four kinds of employers along the way: an independent contractor arrangement, a nonprofit, a mom-and-pop, and finally a company that got bought by a private equity firm. By the time he started North Arrow, one of those doors was staying shut. “Private equity was on the no-go list,” he said. “It was never an option for an exit strategy, because as the founder, that was antithetical to why I started it.”
The problem, in his telling, was arithmetic that never stopped. A business could be healthy and throw off a decent margin, he said, and it still would not be enough. “There was always more juice to squeeze. Those margins weren’t enough. They needed to be bigger.” He watched decisions made in the name of bigger margins land badly on families and on staff. It is a pattern researchers have started to measure: a study published in JAMA Pediatrics in January counted 574 autism service sites bought by private equity across 42 states between 2015 and 2024, with most of the deals clustered between 2018 and 2022.
Why North Arrow Chose an ESOP, and Why It Took Five Years
The route Timm took is uncommon enough that most people in ABA have never watched one up close. In an ESOP, a company is sold into a trust that holds shares on behalf of employees, who collect the value when they leave or retire. It is rarely the lucrative choice. These deals tend to close at a lower multiple than a strategic or private equity buyer would pay, and they often stretch the seller’s payout over years. Timm does not pretend otherwise. “Selling to private equity would have been incredibly easier and less costly, and there’s a much bigger upside for ownership,” he said. “But that’s not what we did this for. This was not about personal benefit. This is about raising the bar of quality services for Northern Michigan.”
The transition was a long time arriving. Timm said the ESOP had been the plan for more than five years, and the company had spent that stretch behaving as though the paperwork were already done: profit sharing, financials shared openly with staff, an “employee owner agreement” meant to approximate the economics of ownership before the legal structure existed. “This formalization has really reinforced that we’re walking the walk,” he said. He gives much of the credit to the firm that steered the deal, Pilot Hill Advisors, and to the long runway that let North Arrow clear the financial benchmarks first. “It doesn’t happen overnight,” he said. “Find a good advisor, and make sure you have a healthy business before you engage in the process.”
What an ABA Employee-Ownership Model Does Not Guarantee
Timm is quick to puncture the romantic idea about employee ownership, which is that it hands workers the controls. It does not. “Employees who have stock in the company, their benefit is the stock,” he said. “They don’t have voting privileges. We’re not required to run things by the employees prior to making any decisions.” An ESOP, he said, works a lot like owning shares in a public company: you might vote for a board, but you are not steering the business day to day.
What makes North Arrow feel different is everything the company chooses to add on top. The leadership team came through the transition unchanged, the executive, clinical, and administrative heads all keeping their seats. Staff elect an advisory committee, soon to be renamed for the ESOP, whose members carry the workforce’s questions into quarterly meetings on the company’s numbers. Timm is careful about the line between what the law requires and what North Arrow does anyway. The company is “not required to run things by the employees prior to making any decisions,” he said, and then, of doing it regardless: “Nevertheless we do. That’s something we opt into.”
The transition also brought a change at the top of the clinical organization, one Timm confirmed on the record for the first time. Sarah Rader, who has been with North Arrow for years, is moving into the Chief Clinical Officer role. Timm, who stays on as founder and will chair the company’s new board, is handing off the clinical reins. “I’m just no longer top dog on the clinical food chain,” he said. The change lands in the middle of a busy season for leadership moves across ABA and behavioral health.
Employee-Owned Growth Without the Private Equity Mandate
Timm is not against growth. “A business has to grow,” he said. “That is something I’ve learned over the past decade.” His quarrel is with the direction growth usually takes. Private-equity-backed platforms tend to follow the density, planting themselves in the biggest and most lucrative markets. North Arrow points the other way, toward the places those platforms skip. Northern Michigan, as Timm describes it, is a service desert. He knows the terrain from the inside: born in Traverse City, he had to leave Michigan for most of a decade after finishing his master’s in 2011, because the services he was trained to deliver hardly existed where he was from. Michigan’s autism insurance law, passed in 2012, widened access enough that he could come home in 2017.
So the growth plan is really a hiring plan. The scarce resource in Northern Michigan is not children who need therapy but clinicians willing to move for the work, in a field where keeping behavior analysts, not just recruiting them, is the problem most providers underestimate. Nationally, postings for BCBAs passed 132,000 in 2025, a jump of 28 percent in a year, and Timm said convincing someone to relocate even from Grand Rapids to Traverse City can be a slog. North Arrow’s workaround is to go to the clinicians instead of waiting for them: its newest center opened downstate in Cedar Springs, north of Grand Rapids, a beachhead the company hopes to use to draw talent farther north over time. There is also the matter of trust. Behavior analysts, Timm said, tend to arrive wary, “because you get burned so many times working for someplace.” He added, “I’ve been there.”
Do Employee-Owned ABA Providers Last?
The hardest question about North Arrow’s structure is whether it will hold, and ABA has a discouraging answer on file. Lighthouse Autism Center, in Indiana, set up an ESOP in 2017. It then passed to the private equity firm Abry Partners and, in 2021, to Cerberus Capital Management in a deal reported north of $400 million. Employee ownership, in ABA, has more often been a stop along the way than a place to stay, which is part of why real examples are so thin on the ground. The pull has not weakened: plenty of the firms that bought into ABA years ago are now past their hold windows and looking for the exit. Other ways of sidestepping the private equity model exist, from franchises to clinician-owned shops, but few have lasted at any real size.
Timm argues the guardrails are already in place. The long runway, the healthy books, and above all the refusal to leave Northern Michigan are, to his mind, what should keep North Arrow off Lighthouse’s path. He points to an ESOP in his own family, his father-in-law’s business, where the employees themselves set the pace of growth, and to older employee-owned companies whose long-tenured workers have retired with real money in their accounts. He will not promise the same. “Obviously we can’t guarantee our company is going to perform like that,” he said. “But that is the hope, that no matter what that dollar amount is, we are sharing the fruits of our labor.”
Timm did not set out to run an autism company. He wanted to write music for film, studied composition, then drifted into psychology and, from there, into behavior analysis, which he says did more for him than any of it. “Applied behavior analysis really changed my life for the better,” he said, and rattled off the interventions he has run on himself, from exercise to flossing. What he is trying to do now, he suggests, is take that private conviction and build a company that cannot easily be talked out of it. For the clinician founders watching private equity swallow the field, he offered neither a warning nor a pitch, just a fact. “It is replicable,” he said. “It takes a lot of effort and money to execute.”
