Employee Ownership Blog

Madelyn Hammack

National Economic Council Hosts White House Convening on Worker Ownership

On July 25, the National Economic Council (NEC) hosted a meeting on employee ownership in the White House compound that gathered representatives from federal agencies, legislative offices, and the employee ownership community, including the NCEO’s Loren Rodgers. As Joseph Blasi, speaking as a representative of the Treasury Department, noted, never before has a presidential administration hosted such a prominent inter-agency meeting on employee ownership. 

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Madelyn Hammack

NJ Partners with Rutgers University to Promote Employee Ownership

The New Jersey Economic Development Authority (NJEDA) has announced a significant collaboration with the Rutgers University School of Management and Labor Relations (SMLR) to foster employee stock ownership plans (ESOPs) across the state. This partnership aims to create educational and informational programs to increase the number of New Jersey businesses implementing the ESOP model. Professor Bill Castellano, Executive Director of the New Jersey/New York Center for Employee Ownership, will be leading the charge. “A large percentage of retiring business owners have few succession plan options, and don’t realize they can sell the company to their employees instead of closing up shop,” he said. “Employee ownership strategies save jobs and help to keep the business and the local economy going.”

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Corey Rosen

NC Law Allows Minority ESOPs to Qualify for HUB Program

The North Carolina legislature has passed and the governor has signed S. 802 (PDF), an infrastructure finance bill that also includes an unrelated provision allowing ESOPs in which at least 51% of the participants are “minority persons or socially and economically disadvantaged individuals” to qualify for the state’s historically underutilized business set-aside program. The law states that “an ESOP company applying for certification as a historically underutilized business shall provide an attestation that it meets the requirements of this subdivision together with such documentation supporting the attestation as may be required by the Secretary." The law became effective on July 1, 2024.

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Lindsay Isaac

The Download: A Year in Review

This June marked the one-year anniversary of The Download, a monthly NCEO member resource designed to help improve education and engagement at employee-owned companies. To commemorate, we've put together a "yearbook" to highlight the resources that have been distributed so far. The Download has covered a variety of topics in its first year, including the ESOP landscape, ESOP nuts and bolts, and ESOP culture.

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Corey Rosen

SBA Simplifies Valuation Requirements for ESOP Transactions

When it became law in 2018, the Main Street Employee Ownership Act was widely seen as a boost to employee ownership by facilitating SBA financing, but so far, it has had only a minor impact, supporting the financing for fewer than a dozen ESOP transactions. The U.S. Small Business Administration (SBA) has issued procedural guidance (SBA Procedural Notice control no. 5000-858322, June 24, 2024) providing that a valuation done for an ESOP trustee to obtain a fair market value for shares purchased by the ESOP in a leveraged transaction using an SBA loan guarantee under the Main Street Employee Ownership Act of 2018 will satisfy the SBA's requirement for a valuation of the stock. Before this guidance was issued, SBA officers could and often did ask for a separate valuation to be performed following SBA standards. That meant companies would have two different valuations and correspondingly greater costs, and the transaction would take more time. There could also be fiduciary issues if the SBA valuation came in below the valuation for the trustee, while if the valuation came in higher, sellers might be less willing to do the deal.

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Corey Rosen

NC Bill Lets ESOPs Qualify for Minority Contracting

A new bill in the North Carolina Senate would allow ESOP companies to qualify for state contracting preferences based on ownership by historically disadvantaged groups. Currently, ESOP-owned companies do not qualify for any contracting preferences in federal or state programs aimed at historically disadvantaged groups because the legal owner of the ESOP is a trust, not a qualifying individual or individuals.

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