Why ESOPs?
While there is a good deal of misinformation on ESOPs, the statistics have shown that on average they produce better results than any other form of exit strategy. Employee-owned companies experience increased employee satisfaction, retention, and productivity gains when compared to their counterparts (NCEO). Moreover, with the ability to stay on with the company post-transaction, the seller is able to continue to manage the company; their legacy is preserved.
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Fair Value
Owners get paid full fair market value for the business from buyers that they know and trust - their employees.
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Additional Payout
Sellers have the opportunity for additional payouts through a warrant plan that is incorporated into the sale.
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Continued Role
Owners can keep complete control of the company. It is business as usual, but the employees now also have a stake in the game.
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Tax Exemption
Owners enjoy not having to pay taxes on profits for whatever portion of the business is owned by employees. 100% ESOP means no taxes.
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Job Security
The current management team and employees keep their jobs, but now as partial owners of the company, all at no cost to them.
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Company Booms
ESOPs have been found to boost sales and employment by more than 2% a year compared to similar companies without ESOPs.
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Community Gains
On average, ESOP employees enjoy 92% higher median household wealth, 33% higher income from wages, and 53% longer median job tenure - generating powerful community benefits.
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Customer Satisfaction
Consumers continue to benefit from local products/services that maintain their integrity and pricing.
ESOPs Are Everywhere
Many companies you know are ESOPs.
From grocery stores, to breweries, to mortgage banks, to construction, to well... just about anything! ESOPs are everywhere! Check out some well know ESOP companies below.
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ESOP Wisdom
I’d always heard that ESOPs help create employee involvement so I thought this could be a win-win—they help us succeed and we share the company with them. It’s a pretty good way for the people who work for you to make some real money.
The business world we live in is not only changing but changing at a rapid pace, and we all need all the resources we can bring to bear to meet this challenge. At Web, we do not have only our corporate or site leadership teams to deal with this challenge — we have all 500 employee-owners to deal with this. ‘All of us is greater than one of us.'
Many of the deficiencies of our economic system could be alleviated if ways were found to broaden the ownership of the means of production... This has happened in companies through ESOPs. Successful approaches of this sort would pay dividends in terms of employee commitment and morale. And they would not deprive anyone of his present holdings since they are based on future growth.
An ESOP by itself changes nothing but a company’s ownership. The real change comes when and if a company decides to treat its employees like the owners they are. That means helping everyone understand their rights, their responsibilities, and how the business operates. It usually means asking people to take initiative to improve the company’s performance.
