Why Employee Ownership?

Employee Ownership offers a unique solution to several pressing economic challenges
Employee ownership sits at the intersection of several key economic issues.

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    Severe Wealth Inequality

    Self-perpetuating, especially as growth in returns to capital continues to outpace growth in economy

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    Retirement Savings Crisis

    Employees struggle to save enough to see them through retirement

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    Unstable Employment

    Companies have the option to automate or relocate operations off-shore. Employees can be disengaged from work, not feeling part of something larger than themselves

Employee Ownership Drives Better Outcomes for Participants and Sellers

1. Increased Employee Wealth

  • Employee-owners have 2.5x more assets in their retirement accounts and 20% more assets overall
  • Average employee-owned company contributed $4,443 to each individual’s account annually, while traditional companies contributed $2,533
  • Median hourly wage at employee-owned companies is 5-12% higher
  • Default rate on loans to ESOPs is 0.2% while comparable companies are 2-3.75% 

2. Stable, Meaningful Employment

  • During the Great Recession, employee- owned companies laid off 12%.
  • Employee owners are 40-50% less likely to say they will be looking for a new job next year.
  • Employee owned companies had 25% higher job growth than comparable companies over a 10-year period.

3. Successful Exit for Owner

  • Sellers defer capital gains on proceeds from sale.
  • Sellers receive an independent, fair market valuation for their company.
  • Sellers are able to sell company in a way that aligns with their values.
  • 94% of company’s believe creating employee- ownership was “a good business decision that has helped the company”. 
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Business Owners Are Retiring at Alarming Rates

Worker-ownership is not just a practical solution – it has the potential to turn this crisis into an opportunity. It could make what would otherwise be a severe economic contraction into the largest intergenerational and inclusive transfer of wealth in our history.

    • Retiring baby boomers own 66% of US businesses with employees (38% of businesses overall)
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    • "Baby Boomers Ready to Sell Businesses to the Next Generation"
    August 2015 

    • Nearly 4 million businesses are owned by retiring baby boomers
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    • “The Baby Boomer-owned business crunch has started.”

    October 2015 

    • Trillions of dollars in business value could change hands over next decade
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    • “Retiring Baby Boomers are Selling Their Small Businesses”

    May 2013 

    • Only 30% of family businesses succeed to a 2nd generation, and only 15% to a 3rd generation
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    • “Baby boomer retirement glut poses risk, CIBC says”

    November 2012 

Massachusetts Could Have Thousands More Employee Owners
Good candidates for employee ownership conversions are:

1. Privately Owned

  • Conversion requires agreement of existing owners
  • Simpler process for privately held companies

2. Long Operating History

  • Stable business with long-time committed employees
  • Business owner ready to retire

3. Good Financial Position

  • Requires loans to buy out existing owner

4. 10 to 1,000 Employees

  • Small to medium sized businesses are ideal for employee ownership

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Promoting Employee Ownership

The Massachusetts Center for Employee Ownership successfully encouraged employee ownership before it was defunded in 2008 during the deep budget cuts of the great recession. In July of 2017, the Massachusetts Legislature passed an amendment to refund the institution. 

Feel free to give us a call or send us an email with any questions or comments you have.