Bret Keisling discusses the impact of employee ownership (EO) on creating a permanent legacy for company founders. He highlights the Silver Tsunami phenomenon, which will see many baby boomer business owners ready to retire, the rarity of successful business sales, and the benefits of transitioning to employee ownership. Keisling emphasizes the positive legacy and community impact of EO, urging business owners to consider the long-term effects of their decisions. He also offers his expertise to guide owners through ESOP transactions.
If you're considering a transaction to become an ESOP, and you don't know where to turn or how to get started, or what to believe with all the myths out there, schedule a free, no obligation chat with Bret Keisling on calendy here or email Bret at Bret@Keisop.com.
Listen to this episode on Soundcloud or subscribe on Google / YouTube Podcasts, iHeart, Spotify, Amazon, or Apple Podcasts...
... or watch the video below.
The ESOP Podcast is licensed under a CC BY-NC-ND Creative Commons License.
Mini-cast 256 Transcript
[00:00:00] Bret Keisling: Welcome to the ESOP Mini-cast. Thank you so much for listening. My name is Bret Keisling, and as it says on my business cards, I'm a passionate advocate for employee ownership. Today I want to spend a few minutes talking about something that perhaps gets overlooked a bit when a company is considering transitioning to employee ownership, and that's how EO can create a permanent legacy for the company founder or owners that instituted employee ownership.
[00:00:35] Bret Keisling: First, let's drop some facts. From our friends at the National Center for Employee Ownership and Project Equity, and others to be fair, we know that we are in the midst of what has been dubbed the Silver Tsunami. For the last 10 years, baby boomers have been approaching or reaching retirement age, forcing the boomer business owners to figure out what's going to happen to the business when they're done.
[00:00:57] Data shows that only 20 percent of the businesses that get put on the market will end up being sold or transitioning to employee ownership, for example. We also know that it's extremely rare for a business to be sold on its first attempt. As a matter of fact, on average, it takes five bites at the apple before a company is actually sold.
[00:01:16] The remaining 80 percent of businesses that don't find a buyer close down and are gone forever. Obviously, if a business is sold to an outsider, especially if it's the strategic acquisition from somebody already in the company's space, jobs are often cut and the businesses themselves are often relocated, leaving a hole in their communities when they go.
[00:01:39] On the other hand, employee-owned companies are usually a lot less amenable to outside takeover or to relocate out of their home communities and states. In fact, we know from research conducted after the pandemic that employee-owned companies are four to five times less likely to have layoffs during tough economic cycles and four times less likely to have pay cuts. As I often point out, these two facts, fewer layoffs and fewer pay cuts, make a big difference in maintaining a community's tax base.
[00:02:08] Now let's talk about what this means to the company founder's legacy. Yes, they can sell to an outsider and maybe get more from the sale, but it's a misnomer to think that that's automatically true.
[00:02:18] With the right transaction design and taking into account tax advantages of a sale to an ESOP, the misperception that the founder will receive less in an EO transaction has been disproven time and time again.
[00:02:31] Employee ownership cements the founder's legacy in the business and in their communities. As part of the celebration of employee ownership, owners are often revered for having the foresight to keep the company going through their employees.
[00:02:44] We've had numerous examples on the podcast. If you visit the websites for Hypertherm, Carris Reels, and Davey Tree Company to name just a few, you'll see that the owners to this day remain celebrated, not just for starting the company and growing it, but for making the decision to sell to the employees and therefore permanently cementing their legacy for their vision and business acumen.
[00:03:07] So, if you're a business owner and founder, does your legacy matter to you? Do you want to be vaguely remembered as somebody who made a whole lot of money and then left? Or do you want to be remembered for empowering all of your employees while doing right by your community as well? Employee ownership is an amazing way to create a permanent, positive legacy for the company founders.
[00:03:28] Before we wrap up, I just want to share that if you're considering a transaction to become an ESOP or Workers Cooperative, and you don't know where to turn or how to get started, or what to believe with all the myths out there, I can help. I'm a former ESOP CEO, I'm a former ESOP trustee who did 40 to 50 initial ESOP transactions, and continuing on my work through The EsOp Podcast, I'm an expert on all aspects of the transaction.
[00:03:54] We'll include a link in the show notes for this episode to my calendar. Schedule a free no obligation consultation with me and see if I can help secure your legacy by helping you create a financially successful transaction. I look forward to hearing from you.
[00:04:09] With that, we'll wrap up this episode of the Mini-cast. Thank you so much for listening. My name is Bret Keisling. Be well.
[00:04:16] Bitsy McCann: We'd love to hear from you! You can find us on Facebook at EO Podcast Network and on Twitter [X] @EsOpPodcast. This podcast has been produced by Bret Keisling for the EO Podcast Network. Original music composed by Max Keisling. Branding and marketing by BitsyPlus Design. And I'm Bitsy McCann.
Standard Disclaimer: The views expressed herein are my own and don't represent those of my own firms or the organizations to which I belong. Nothing in the podcast should be construed as guidance or advice of any kind in any field and the fact that I mentioned an organizational website or an advocate or a company on a podcast does not reflect an endorsement, but if you've heard your name or your group's name mentioned on this podcast, I'd love to have you come on and talk about it yourself.
A note on the transcript: This transcript was produced by Descript, an automated transcription service. While it has been reviewed by The EsOp Podcast, we cannot guarantee the accuracy of the transcription. Please refer to the original audio when citing sources.