Most advisors and succession planners are either unaware of EO or misunderstand it. Sometimes supporting owners to pursue other exit-paths better aligns with their incentives. However this is changing and there are many ongoing efforts to raise awareness of EO.
In spite of its many benefits, employee ownership has been called a "well kept secret" by practitioners for decades. Most advisors and succession planners are either unaware of EO or misunderstand it. Sometimes supporting owners to pursue other exit-paths better aligns with their incentives (e.g., "finder fees" only being applicable if a broker or investment banker finds a 3rd party buyer.)
In fact, did you know that shortly after the founding of our country, Thomas Jefferson created a plan to jumpstart the nation's cod fishing fleet, but on condition that those companies who receives the tax credit had to enable profit sharing with the employees? That's right, EO was around and being encouraged by the founding fathers!
EO companies occur in every industry, and come in all sizes (whether by annual sales, number of employees, etc.). They can be large:
- Publix Supermarkets is the largest ESOP in the US and is an 80% EO ESOP allocated across over 250,000 employees
- The global flagship EOT company is the UK’s John Lewis Partnership, which employs 80,000 partners, has over 360 retail outlets, and has been owned by an EOT since 1929
- The global flagship worker cooperative is the Mondragon Cooperative Corporation which currently consists of 81 separate, self-governing cooperatives, around 70,000 people and 12 R&D centres, occupying first place in the Basque business ranking and tenth in Spain.
EO companies can also be much smaller, such as Isthmus Engineering in Madison, WI, with its 80 worker-owners; or consider Local Ocean Seafood, an 81 employee EOT in Newport, OR that is preserving its local fish food service business in perpetuity for its community. EO companies can go all the way down to as few as three employee-owners.
The National Center for Employee Ownership has been advocating for EO transitions since its forming in 1981, and similar with the Democracy at Work Institute which formed in 2013. Some recent efforts, such as by Project Equity, in the creation of their "ExitPro" certification for small business advisors, are also helping to raise awareness and education.