Corey Rosen
The comment period for a proposed Department of Defense (DOD) rule allowing 100% ESOP-owned companies to receive sole source follow-on contracts ends on July 29.
Madelyn Hammack
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.”
Loren Rodgers
With the appointment of an experienced worker ownership professional, Hilary Abell, as the division chief of the Division of Employee Ownership, the federal government now has a full-time staff member dedicated to helping employers and employees learn about employee ownership.
Corey Rosen
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.
Nancy Wiefek
A rigorous new study conducted by Dr. James Hasik on behalf of the Employee-Owned Contractors Roundtable provides more evidence of the particular, positive impact of ESOP firms on company performance and resiliency.
Lindsay Isaac
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.
Corey Rosen
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.
Corey Rosen
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.
Corey Rosen
Governor Jared Polis of Colorado has signed HB24-1157, a bill that provides statutory authority for the Colorado Employee Ownership Office, which Governor Polis created in 2020 through an executive order. The office provides technical assistance, coordinates with other agencies, and conducts outreach. The bill would make the office permanent and expand prior tax credits for the costs of converting to or expanding an employee ownership plan. The law provides a refundable tax credit for up to $50,000 of the costs of setting up an employee ownership plan, defined as an ESOP, employee ownership trust, worker cooperative, or equity grants or rights given directly to at least 20% of a company’s workforce where those workers hold 20% or more of the company’s fully diluted securities. Conversions to other qualified forms of employee ownership now also qualify for a credit of up to 50% of the costs, up to a maximum credit of $25,000. The law also provides a tax credit of 50% of the costs, up to a maximum credit of $25,000, for a qualified employee-owned business expanding its employee ownership stake by at least 20%.
