Transitioning a small business to employee ownership can have positive impacts on employee engagement, productivity, and retention; anchor a lasting legacy for your efforts building the business; and offer a financially rewarding exit path that can be supported by experienced professional assistance. Small business owners throughout the United States are increasingly seeing employees as highly desirable buyers because their expertise operating business offers continuity, which buoys company value, and because of their commitment to the main street social fabric that could be jeopardized by outside buyers.
Converting to a cooperatively owned business can benefit the business, existing owner and the community:
Good for the Business
- Studies show that the combination of employee ownership and employee participation yield substantial improvements in firm performance.
- As companies that maintain jobs and wealth in the community, employee-owned businesses often have loyal customers who patronize the business for their values as well as their services.
- Employee-owned businesses have been shown to attract talent and have above average retention rates.
- Employee ownership keeps companies competitive by engaging all employees as problem-solvers and innovators.
- Depending on the form, employee ownership can have significant tax advantages that allow for increased working capital to grow and improve the business.
Good for the Business Owner
- Selling to employees is a flexible exit strategy. The selling owner(s) can reduce involvement in the company on their own timeline.
- The selling owners can institutionalize the values and culture of the company they built, which is not generally possible in a sale to a competitor or private equity firm.
- Owners can protect jobs and reward the employees who helped make the company successful.
Good for the Community
- In an employee-owned company, the profits of the business go to employees, not distant investors, building community wealth and strong local economies.
- Employee-owned companies provide quality jobs with better compensation and meaningful opportunities to participate in decision-making.
- As locally rooted businesses, employee-owned companies often give back to their communities by supporting local causes