Problems & Solutions

Employee ownership sits at the intersection of several key economic issues

Employee Ownership Drives Better Outcomes for Participants and Sellers

  • 1. Increased Employee Wealth

    • Employee-owners have 2.5x more assets in their retirement accounts and 20% more assets overall
    • Average employee-owned company contributed $4,443 to each individual’s account annually, while traditional companies contributed $2,533
    • Median hourly wage at employee-owned companies is 5-12% higher
    • Default rate on loans to ESOPs is 0.2% while comparable companies are 2-3.75% 
  • 2. Stable, Meaningful Employment

    • During the Great Recession, employee- owned companies laid off <3% employees, while conventionally owned companies laid off >12%
    • Employee owners are 40-50% less likely to say they will be looking for a new job next year
    • Employee owned companies had 25% higher job growth than comparable companies over a 10-year period 
  • 3. Successful Exit for Owner

    • Sellers defer capital gains on proceeds from sale
    • Sellers receive an independent, fair market valuation for their company
    • Sellers are able to sell company in a way that aligns with their values
    • 94% of company’s believe creating employee- ownership was “a good business decision that has helped the company” 

 

 

Business Owners Are Retiring at Alarming Rates

Worker-ownership is not just a practical solution – it has the potential to turn this crisis into an opportunity. It could make what would otherwise be a severe economic contraction into the largest intergenerational and inclusive transfer of wealth in our history.

 

  • Retiring baby boomers own 66% of US businesses with employees (38% of businesses overall)


  • Nearly 4 million businesses are owned by retiring baby boomers


  • Trillions of dollars in business value could change hands over next decade


  • Only 30% of family businesses succeed to a 2nd generation, and only 15% to a 3rd generation


  • Over 70% of business owners over the age of 50 do not have a succession plan 


  • "Baby Boomers Ready to Sell Businesses to the Next Generation"

    "Baby Boomers Ready to Sell Businesses to the Next Generation"

    August 2015 

  • “The Baby Boomer-owned business crunch has started.”

    “The Baby Boomer-owned business crunch has started.”

    October 2015 

  • “Retiring Baby Boomers are Selling Their Small Businesses”

    “Retiring Baby Boomers are Selling Their Small Businesses”

    May 2013 

  • “Baby boomer retirement glut poses risk, CIBC says”

    “Baby boomer retirement glut poses risk, CIBC says”

    November 2012 

Promoting Employee Ownership

The Massachusetts Office of Employee Involvement and Ownership successfully encouraged employee ownership before it was defunded as a part of broader budget cuts during the recent recession. In July of 2017, the Massachusetts Legislature passed an amendment to refund the institution. 

We thank Senators Cyr, Moore, Boncore, Eldridge and Representatve Mark for their leadership in the Legislature. And we praise Governor Baker for investing in this smart, low-cost, high-impact way to build employee ownership across the Commonwealth.

The best advocates are employee-owners

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