Los Angeles County Department of Economic Opportunity and Project Equity Launch Employee Ownership Initiative to Preserve Legacy Businesses
LOS ANGELES COUNTY, CA (January 12, 2023) — The Los Angeles County Department of Economic Opportunity (DEO), in partnership with Project Equity, launched Employee Ownership LA County, a new business succession and recovery service today aimed at preserving legacy small businesses and creating opportunities for shared ownership, wealth generation, and economic mobility for workers and owners alike in LA County. Employee Ownership LA County, offered by Project Equity as part of DEO’s Office of Small Business – Small Business Concierge, will help business owners explore their options to sell their company to their employees while preserving jobs and sustaining wealth opportunities. The service will feature education, technical assistance, and direct transition support for participating businesses and workers.
According to a study by Project Equity, about half of the privately-held businesses in Los Angeles County are owned by baby boomers nearing retirement. There are over 25,000 local businesses over 20 years old that account for over 750,000 local jobs and over $225B in local revenue. This includes businesses across all five supervisorial districts and historically disinvested regions, according to the County’s COVID Vulnerability Index. It also impacts all sectors, including manufacturing, construction, retail, entertainment, food services, and more. This represents an impending, massive ownership change of locally held businesses. This silver tsunami coupled with the lingering impacts of COVID-19, means these businesses across the County urgently need solutions. This is a critical time for business owners to consider pathways to retirement, particularly how employee ownership can address current business needs.
Without an exit plan, many local businesses in Los Angeles County are at risk. Additionally, the pandemic has made recruitment and retention of employees more challenging for business owners, thus slowing the recovery of their operations. These are some of the reasons this approach has been championed by Supervisor Holly Mitchell in her Worker Ownership Initiative, unanimously adopted by the Board of Supervisors.
“This initiative is an important step on our path to recovery and an opportunity to invest in addressing long standing economic inequities that have only worsened due to COVID-19,” said Supervisor Holly Mitchell of Los Angeles County District 2. “Employee Ownership is a priority of the Second District because of its ability to build wealth and retain and strengthen locally owned businesses.”
The launch event was celebrated by community leaders and shared ownership champions and hosted at Giroux Glass, a 100% employee-owned glass, glazing, and architectural metals contracting company in Supervisor Mitchell’s District. There are many other businesses in Los Angeles County reaping the rewards of employee ownership as well like Proof Bakery, Maximum Fun, and Delta Pipeline. Employee owned firms have been shown to outperform their peers with increased employee engagement and retention, higher profits, and greater resilience during economic downturns like the COVID-19 pandemic.
DEO and Project Equity are teaming up to raise awareness of employee ownership as a strategy to strengthen LA County’s economic resilience, protect local jobs and revenue, and help business owners recruit and retain employees. Through this collaboration, Project Equity will provide hands-on support to companies that want to explore and execute employee ownership transitions. The initiative will be launched partially through federal American Rescue Plan Act of 2021 (“ARPA”) funds. “The Department of Economic Opportunity is thrilled to launch this important resource for small businesses in Los Angeles County, “ said Kelly LoBianco, Director of DEO. “DEO is here to support small businesses as they start and grow. We do this in partnership and with creative approaches. Shared ownership is a way for our businesses to pragmatically secure their legacy and optimize worker and community benefit and future resiliency. We are excited to add this service to our Small Business Concierge and build understanding and momentum around this pathway. ”
The service is a partnership of Project Equity, a nonprofit that helps business owners preserve their legacy through employee ownership. “We are excited about this partnership with Los Angeles County. As more business owners face retirement or struggle to recover from the pandemic, the community becomes vulnerable to losing the local favorites that make up its culture and identity. Through this effort, we can keep these businesses in the community for future generations, preserving jobs and a strong local economy,” stated Evan Edwards, Chief Executive Officer at Project Equity.
Business owners in LA County that want to explore whether employee ownership is fit for their business can learn more and book a free one-on-one consultation. This service and the webpage also includes resources for business advisors, like wealth planners and CPAs, and other business-serving organizations in LA County. DEO and Project Equity encourage all business owners and advisors in LA County to reach out and learn more about how to unlock the power of employee ownership for their business or clients.