Great synthesis of a topic that provides considerable hope! Thanks to those whose years of work laid the groundwork for employee ownership to finally get its "moment" and to the capital providers who are stepping-up. The next capital challenge to be solved is making it feasible for businesses with $1M to $20M in revenue to access patient capital, without expectation of a future sale. This eliminates the distraction of needing to generate short-term returns for investors and allows all stakeholders to focus on building value for the long-term. Employee ownership’s full potential also requires learning new ways to engage business owners early in the succession process and helping them to understand the full range of ownership structures, both within and beyond the ESOP model. Perhaps with the Silver Tsunami, many of the newly-retired business owners can be enlisted to carry this important message to their younger business friends.
Really excellent research and article, opening my eyes to what is taking place and the powerful impact that can be created; this is an opportunity to be developed much more widely. I’d like to see what could be done with it in the UK.
Nice overview of the EO debt market and many of the new capital participants it now is attracting. Problem is if we want to scale employee ownership, we need to adopt to what’s there and not re-create the wheel. Excellent example is; American Working Capital model the Employee Equity Loan Act, suggesting creation of $100 billion in federal loan guarantees for employee ownership financing. SBA loan gtys already exist and they do majority of all small business acquisition financing in the nation now - why not try to add incentives to that program that will make it work for EO?. For example, banks already sell off gtyed portion of SBA loans at a premium in secondary market. Increase premium offered for worker owner deals and instantly you’;ll have every existing SBA bank lender in the country looking out for those loans. Investors get fully gtyed government paper, banks get incentive to find more deals and workers get prefered treatment when they apply to local bank. Far better to make what’s there work - saves lots of time and provides a path to scalability.
COMMENTS
BY JOHN HAMILTON
ON January 3, 2022 03:38 PM
Great synthesis of a topic that provides considerable hope! Thanks to those whose years of work laid the groundwork for employee ownership to finally get its "moment" and to the capital providers who are stepping-up. The next capital challenge to be solved is making it feasible for businesses with $1M to $20M in revenue to access patient capital, without expectation of a future sale. This eliminates the distraction of needing to generate short-term returns for investors and allows all stakeholders to focus on building value for the long-term. Employee ownership’s full potential also requires learning new ways to engage business owners early in the succession process and helping them to understand the full range of ownership structures, both within and beyond the ESOP model. Perhaps with the Silver Tsunami, many of the newly-retired business owners can be enlisted to carry this important message to their younger business friends.
BY Susannah Nicklin
ON January 8, 2022 07:12 AM
Really excellent research and article, opening my eyes to what is taking place and the powerful impact that can be created; this is an opportunity to be developed much more widely. I’d like to see what could be done with it in the UK.
BY Bruce Dobb
ON January 25, 2022 11:00 AM
Nice overview of the EO debt market and many of the new capital participants it now is attracting. Problem is if we want to scale employee ownership, we need to adopt to what’s there and not re-create the wheel. Excellent example is; American Working Capital model the Employee Equity Loan Act, suggesting creation of $100 billion in federal loan guarantees for employee ownership financing. SBA loan gtys already exist and they do majority of all small business acquisition financing in the nation now - why not try to add incentives to that program that will make it work for EO?. For example, banks already sell off gtyed portion of SBA loans at a premium in secondary market. Increase premium offered for worker owner deals and instantly you’;ll have every existing SBA bank lender in the country looking out for those loans. Investors get fully gtyed government paper, banks get incentive to find more deals and workers get prefered treatment when they apply to local bank. Far better to make what’s there work - saves lots of time and provides a path to scalability.