The Benefits of Transitioning Ownership to Employees Through ESOPs

February 8, 2013

Home News The Benefits of Transitioning Ownership to Employees Through ESOPs

An emerging trend among company owners is selling their company to their employees through an Employee Stock Ownership Plan (ESOP).  This is an effective way to transfer ownership of the company as it is often seen as giving back to the employees that helped the company succeed in the first place.

Just a last month New Belgium Brewery co-founder Kim Jordan and her family decided to sell the rest of their shares of the award winning company to their 456 employees. The company, headquartered in Fort Collins, CO, had been partially employee-owned since 2000 and completing the transfer was “the next logical step,” Jordan says. New Belgium is also building a second brewery in Asheville, NC as it continues its eastern expansion.

Employee ownership creates an environment of accountability because they are invested both personally and financially in the success of their company. The benefits of employee ownership are an important factor when deciding to transfer to an ESOP and include less employee turnover, less risk of company default and added retirement benefits for employees. Notably, a 2005 National Center for Employee Ownership study found that employee-owners’ retirement accounts were three to five times larger than the average 401(k) plan. What better way to reward employees for their hard work then to leave them with the opportunity to amass meaningful savings, especially during tough economic times.

Owners like Jordan can be motivated to sell the company to their employees because they simply believe it is the right thing to do. As she mentioned, “There are few times in life where you get to make choices that will have multi-generational impact – this is one of those times.”

Latest News