Private Equity in the Employee Ownership Market

Private equity funding and ESOPs are traditionally opposing strategies, but private equity could become a more active supporter of employee ownership through ESOPs in three ways: Traditional private equity investors deciding to make reasonably priced highly leveraged loans to ESOPs as in the recent loan by the Healthcare of Ontario Pension Plan to fund the Taylor Guitars transaction As a minority investor in ESOP deals By buying companies and then selling them to an ESOP. There is some activity in each of these areas, although the total amounts remain relatively small. As we have described elsewhere, one large private equity fund, KKR, has moved aggressively into the employee ownership space, but not via ESOPs