Find Your Resource

A common theme we hear from members is the difficulty of hiring and retaining great employees. At the NCEO Fall Forum in September, I had the opportunity to work with Jesse Tyler from Hypertherm on a workshop designed to address some of the challenges.

This year’s NCEO Fall Forum provided learning opportunities for the employee ownership community in a virtual setting, and learn we did.

During the global COVID-19 crisis, employee-owned Litehouse, Inc.

Most ESOP companies are openbook to one extent or another. Leadership knows that sharing, tracking, and using the numbers is essential to any ownership culture. It’s not enough, though, just to share top-line results.

The Main Street Employee Ownership Act of 2018 was intended to make it easier for companies wanting to use an ESOP for a business transition loan to get SBA financing through the SBA’s preferred lender program (the “7(a) program” that allows qualifying banks to make SBA guaranteed loans). The SBA, unfortunately, issued standard operating procedures that directly subverted the law. The guidance said loans could not be made through the 7(a) program but had to navigate the more cumbersome process of going through the SBA itself. It required a 10% equity stake to be held outside the ESOP, a personal guarantee from the seller, a valuation done separately for the SBA, and a letter of determination. In short, the rules made the program almost unusable—and hardly any loans were made.

The Consolidated Appropriations Act of 2023, an omnibus spending bill with many parts, contains major wins for employee ownership as part of the SECURE 2.0 Act of 2022. (The original SECURE [Setting Every Community Up for Retirement Enhancement] Act was passed in 2019.)

When a company uses debt to finance an ESOP, there is a loan to the company (the external loan) and a loan from the company to the ESOP trust (the internal loan).

The pandemic and shutdowns provided an opportunity to examine how businesses dealt with a once-in-a-generation economic shock. There is strong reason to believe that employee ownership is a key factor in how businesses and employees fared in this turbulent time.

Employee ownership in medical, dental, and veterinary practices is rare, but three companies are pointing to ways that can change.

ESOP companies are often on the lookout for helpful communication and education resources to support onboarding, training and development, and building an ownership culture. This may be true for companies newly on their ESOP journey, more than 20 years in, or somewhere in between. What do you communicate, when do you communicate, and how do you communicate? These are common questions that arise for ESOPs throughout their life cycles.