ESOPs and Preferred-Status Certification

The NCEO has now released the third part of its three-part series on preferred-status certifications, such as minority-, women-, and veteran-owned businesses. Companies that have one of these statuses often face insurmountable obstacles if they seek to become ESOP-owned, regardless of the demographics of the potential owners. The conflict between the legal requirements for ESOPs and typical standards to qualify for one of these preferred-status certifications makes it extremely difficult for the owner of a certified business to sell her or his company: the economy-wide crisis in business ownership is exacerbated for companies with certifications.

With support from the W.K. Kellogg Foundation, the NCEO has released detailed report, available at www.nceo.org/r/preferred. A print-ready PDF is available on that page or directly here.

The report describes the conflict between ESOPs and certification standards, provides case studies of companies, and makes recommendations both to companies and to certifying agencies. The report also links to an online database of the various certifications, broken down by state and type.

For comprehensive resources of veteran owned small businesses, go to this site.