Employee Ownership Blog

Corey Rosen

RI Senate Unanimously Passes Bill to Create State Employee Ownership Center

The Rhode Island Senate unanimously passed S. 2922, which would create the Rhode Island Center for Employee Ownership (RICEO). According to the bill text, “the purpose of the RICEO will be to secure resources, provide technical assistance, and serve generally as a concierge service both to legacy business owners and worker owners interested in transitioning a small business to an appropriate employee-owned business model.” Worker cooperatives, ESOPs, and companies where a majority of the stock is owned by an employee ownership trust are all explicitly mentioned as examples of employee ownership, but the RICEO could provide assistance for other models. 

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Corey Rosen

More than 4,000 SpaceX Employees Have over $1 Million in Stock After IPO

According to an analysis posted on X by Hill.com founder and CEO Andrew Benson, widely cited in the New York Times and other news outlets, more than 4,000 current and former employees of SpaceX now have more than $1 million in stock (400-plus having $100 million or more), and many others among SpaceX's 22,000 employees have large amounts of stock as well after the company’s record-breaking IPO. 

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Corey Rosen

NJ Bills 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 to 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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