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We are committed to increasing the understanding of employee ownership and its benefits

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March 2024

Employee ownership trusts (EOTs) are an increasingly common way for sellers of closely held companies to transition out of ownership. In an EOT, the company sets up a special-purpose trust to own shares that the company (not employees) buys from the seller using their future profits to repay a note, often from the seller or a combination of the seller and a bank. The trust is designed to hold the shares in perpetuity. The employees are generally not owners but have a claim on company profits through dividends or conventional profit shares. EOTs are often chosen instead of an employee stock ownership plan (ESOP), which offers tax benefits but is much more costly and complex than an EOT. This book helps decision-makers decide whether an EOT is the right approach for their company. Chapter 1 introduces EOTs and compares them with ESOPs. Chapter 2 elaborates on how EOTs work, and chapter 3 delves into structuring them. Chapter 4 explores EOT financing, while chapter 5 discusses EOT governance. Chapter 6 discusses how EOTs can share equity rights with employees. Finally, chapter 7 provides EOT company case studies.

 

Authors: Anne-Claire Broughton, Courtney Kemp, Alison Lingane, Christopher Michael, Corey Rosen, Stacey Smith, and Steve Virgil

 

Purchase the full publication here.

Employee ownership trusts (EOTs) are an increasingly common way for sellers of closely held companies to transition out of ownership. In an EOT, the company sets up a special-purpose trust to own shares that the company (not employees) buys from the seller using their future profits to repay a note,[...]

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Published August 2023

Employee Ownership for Manufacturers

A tool to create resilient supply chains and quality jobs

Though it has long been a backbone of quality jobs and a strong economy, American manufacturing faces a set of mounting challenges. In the wake of the pandemic, supply chains are more fragile than ever and the workforce shortage continues to grow. What is less well documented is that both of these existing challenges could be made much worse by a looming wave of retiring owners who have no clear succession plan: 60% of small- and medium-sized manufacturers have owners at or near retirement age, threatening the future of almost 150,000 businesses and, with them, 3 million jobs. To ensure a future in which American manufacturers can thrive, we must address the risk posed by this “Silver Tsunami” of retiring owners.

This report presents employee ownership as a strategy to address all three challenges with a flexible and proactive succession planning tool. We highlight the growing number of cases in which employee ownership has been successfully used to strengthen small- and medium-sized American manufacturers, including an innovative partnership the Oregon Manufacturing Extension Partnership (OMEP) has formed with Project Equity to offer their clients employee ownership succession planning services. By connecting these pressing challenges with this powerful solution, this report aims to equip key stakeholders to incorporate employee ownership into their toolkits to support small- and medium-sized manufacturers across the country, taking a critical step toward building quality jobs, forming resilient supply chains, and establishing sustainable business models.

Though it has long been a backbone of quality jobs and a strong economy, American manufacturing faces a set of mounting challenges. In the wake of the pandemic, supply chains are more fragile than ever and the workforce shortage continues to grow. What is less well documented is that both[...]

Published June 2023

Broad-based employee ownership sustains quality jobs and builds wealth for employees. It creates stronger and more profitable businesses and preserves the legacy and wealth of small businesses in communities. Project Equity’s publication, Strategies to Advance Black Employee Ownership Employee Ownership offers strategies and practical considerations to advance Black employee ownership as a complement to the Morehouse College paper, Employee Ownership for Black Workers: Closing the Racial Wealth Gap. The paper suggests those strategies should focus on these goals:

  1. Preserving Black wealth for Black business owners through EO transitions
  2. Creating Black wealth by transitioning companies with significant Black workforces (regardless of ownership demographics) to employee ownership
  3. Helping Black-owned micro businesses grow so those that want to consider EO will be ready
  4. Investing in long-term, high-touch development approaches for startup cooperatives

Broad-based employee ownership sustains quality jobs and builds wealth for employees. It creates stronger and more profitable businesses and preserves the legacy and wealth of small businesses in communities. Project Equity’s publication, Strategies to Advance Black Employee Ownership Employee Ownership offers strategies and practical considerations to advance Black employee ownership[...]

Published March 2023

Two undeniable facts make employee ownership a viable solution for closing the racial wealth gap: the wealth gap in America — and Atlanta in particular — is widening and steady, low-wage employment is failing to make a difference. This study explores how traditional structures have contributed to the concentration of wealth in the hands of a few, and how employee ownership can help to democratize the economy and empower Black workers to build wealth and economic stability. Through a combination of case studies and analysis of existing research, Dr. Cynthia Hewitt, Ph.D. of Morehouse College, and Kyle K. Moore, Ph.D. of The New School, make a compelling case for the adoption of employee ownership models as a means of achieving greater economic equity and opportunity for Black workers.

Two undeniable facts make employee ownership a viable solution for closing the racial wealth gap: the wealth gap in America — and Atlanta in particular — is widening and steady, low-wage employment is failing to make a difference. This study explores how traditional structures have contributed to the concentration of[...]

Published March 2023

Kaiser Permanente took a groundbreaking step to become one of the first healthcare anchor institutions to invest in employee ownership as a way to further their commitment to supporting equitable economic opportunity and community health.

The Business Resiliency through Employee Ownership (BREO) pilot initiative, funded by Kaiser Permanente and in partnership with Obran Cooperative and Project Equity, is an innovative approach to strengthening Kaiser Permanente’s supply chain and building community wealth through educating and transitioning suppliers into powerful employee-owned companies.

This report details the outcomes and recommendations of the pilot initiative and demonstrates how philanthropic support and thought leadership by anchor institutions can play an important role in scaling employee ownership.

Kaiser Permanente took a groundbreaking step to become one of the first healthcare anchor institutions to invest in employee ownership as a way to further their commitment to supporting equitable economic opportunity and community health. The Business Resiliency through Employee Ownership (BREO) pilot initiative, funded by Kaiser Permanente and in[...]

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