Common myths about converting to employee ownership
We work with companies from many different industries, and while each business is unique, inevitably, we come across some of the same questions. Like any major shift, there will be challenges, but our experience debunks some of the common myths that may cause business owners to hesitate pursuing employee ownership for their company.
Myth #1 – My employees can’t run my company!
You’re probably right, and nobody would expect them to. That’s the job of the CEO / GM. Management will essentially stay the same as it is now; the primary difference is that there will now be a Board of Directors, which employee-owners elect, and a more participatory culture. Identifying the next CEO (whether internal or external) needs to be part of the plan.
Myth #2 – My employees don’t want to buy the company.
Asking your employees if they want to buy the business is different from asking if they want to become one of many employee-owners. Describing what shared ownership looks like and answering their questions about this ownership model is key to helping them decide.
Myth #3 – My employees don’t have enough money to buy the company.
There’s no expectation that the employees bring the total amount of cash to the table to buy the business. Instead, depending on the form of employee ownership, they may bring an equity ‘buy in’ whose combined value is typically between 1-10% of the total purchase price.
Myth #4 – It sounds hard!
Truth be told, any business succession option takes effort. But you can get help, which makes it easier.
Our latest study across the United States indicates millions of businesses are at risk of closing and point to employee ownership as a solution.
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