"While this moment represents a huge opportunity for buyers and investors, not every business owner wants, or has the opportunity, to sell. Many owners spent decades building their companies and bristle at the idea of selling to traditional private equity or a bigger company that could restructure their business, lay off employees, and jeopardize their legacy."
"Some businesses will pass down to family members, but the majority face closure and 27% of owners 55 and above are unsure of their succession planning. A solution? Steward Ownership models which combine self-determination and purpose orientation. These allow companies to resist speculative takeover and embed mission and values for the benefit of employees, customers, and/or the broader community."
"Since the 1990s, Rick and Mike grew Optimax from 10 employees struggling to make payroll to 500 employees with ~20% annual revenue growth. When the time came to discuss succession, the pair agreed selling wasn't an option-no matter the potential upside. "Mike and I grew up blue collar-we don't need to make billions of dollars," said Plympton."
"They chose to convert Optimax to an Employee Ownership Trust. In 2020, Rick and Mike donated 20% of their equity to the trust. Over time, Rick and Mike will sell their outstanding shares back to the company after which the trust will fully own Optimax. Optimax's profits will then be shared with employees or reinve"
More than six million small and medium businesses are expected to shut down or transition ownership by 2035 as baby boomers retire. About a million of these businesses are considered viable for sale, representing roughly $5 trillion in enterprise value. Many owners do not want to sell, especially to private equity or larger companies that might restructure operations, lay off employees, and harm legacy. Some businesses will pass to family, but many owners remain uncertain about succession planning. Steward Ownership models offer an alternative by combining self-determination with purpose orientation, helping companies resist speculative takeovers and embed mission and values for employees, customers, and the community. Optimax converted to an Employee Ownership Trust after its founders declined selling, donating equity to the trust and planning to sell remaining shares back to the company so the trust fully owns the business and shares profits with employees.
#business-succession #employee-ownership #steward-ownership-models #private-equity-concerns #small-business-ma
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