Employee Ownership Blog

Corey Rosen

NJ Bill Would Create Permanent Employee Ownership Transition Program

In 2024, the New Jersey Economic Development Authority, funded by $2 million from the State Fiscal Year 2024 Appropriations Act, created a technical assistance program and outreach initiative led by Rutgers' Institute for the Study of Employee Ownership and Profit Sharing to promote employee ownership as a tool for business transition. Governor Phil Murphy proposed a $6 million fund for feasibility assistance grants for the program, but it was not approved. The $2 million program has been available to help defray the costs of feasibility studies. 

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Corey Rosen

New NCEO Paper Finds ESOP Sales Cost Less Than Other Exits

A new NCEO paper, Why Selling to an ESOP Costs Less than Selling to Another Buyer: Breaking Down the Cost Differences (PDF; also see the embedded version below) takes a detailed look at the various cost components of selling to an ESOP versus selling to another buyer. The paper was based on conversations with multiple people involved in ESOPs and in exit planning generally. The bottom line is that selling an ESOP usually costs between 2% and 4% of the transaction price, while selling to another buyer usually costs between 4% and 9%. Of course, these are general findings, and some deals cost less, while others cost more. The cost as a percentage of the transaction value is smaller in larger deals and in deals with less complex structures and financing.

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Corey Rosen

New SBA Rule Raises Barriers for Loans to ESOP Companies

The 2018 Main Street Employee Ownership Act made it much more practical for the SBA to guarantee bank loans under its 7(a) program for companies seeking to borrow money to buy out owners through an ESOP. After the law was passed, the SBA issued standard operating procedures that directly contradicted the law; however, by 2022 these issues were largely resolved, and banks started making loans under the 7(a) program.

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Corey Rosen

Bill Would Exclude RSUs from Overtime Pay Calculations

Representatives Ryan Mackenzie (R-PA) and Tim Walberg (R-MI) have introduced the Valuing Employee Stock Today Act, H.R. 8660. The law would amend the Fair Labor Standards Act of 1938 (29 U.S.C. 207(e)) by adding restricted stock units to an existing exemption for “any value or income derived from employer-provided grants or rights provided pursuant to a stock option, stock appreciation right, or bona fide employee stock purchase program from the determination of an employee’s regular rate for purposes of calculating such employee’s overtime compensation.” The purpose of the exemption is to ensure that restricted stock units (RSUs) are not subject to overtime pay calculations. 

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Scott Rodrick

California Governor's Executive Order on AI Supports EO

California Governor Gavin Newsom, who stated on May 19 that "You cannot save democracy unless we democratize the economy," issued an executive order on AI on May 21 that in part directs the state government to review opportunities to expand employee ownership and review policies to provide displaced workers with a safety net that could include stock and other forms of equity.

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Nancy Wiefek

Federal Data: Employee Ownership Firms Are More Productive

A new research paper, Employee Share Ownership, Management Practices, and Labor Productivity: An Analysis Using Establishment Level Micro-Data from the U.S. Census, addresses long-standing questions about ESOPs and productivity. The research team, led by Fidan Ana Kurtulus at the University of Massachusetts Amherst, compiled the largest and most comprehensive data to date on broad-based employee ownership at both privately held and publicly traded US manufacturing companies. Specifically, they combined three restricted US Census micro-databases—the 2010 and 2015 Census Management and Organizational Practices Survey (MOPS), the American Survey of Manufacturers (ASM), and the US Longitudinal Business Database (LBD)—with the US Department of Labor’s Form 5500 Private Pension Plan (PPP) database.

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Corey Rosen

New Book by HB Global CEO Makes the Case for Employee Ownership

In Beyond Your Ownership: How Employee Ownership Can Align Your Purpose, People, and Profit, Bob Whalen, the CEO of ESOP-owned HB Global, and Jamie Dykstra, who helped write the book, draw on the company's remarkable history since becoming ESOP-owned to demonstrate the power of employee ownership. Whalen bought the commercial and residential contractor in 2008 when it had 133 employees. He sold it to an ESOP in 2010 but remains the CEO. The company has grown to 1,700 employees, partly through organic growth, but significantly through an active acquisition program. HB Global has done over 30 acquisitions, a few of which have been funded by its separate business unit, HB Capital, which acts as its own special-purpose private equity firm that buys target firms and ultimately sells them to an independent ESOP or HB Global. 

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Corey Rosen

Canada Makes Employee Ownership Trust Tax Incentive Permanent

In 2024, Canada enacted legislation that exempts the first $10 million (Canadian) in gains from the sale of a business to a qualifying employee ownership trust (EOT). The exemption was set to be available only until the end of 2026. The government’s proposed 2026 budget would have eliminated the incentive, but after a campaign by supporters of the new law, the spring 2026 government budget update will make it permanent. 

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