Many would agree that the economic imbalance in the United States is staggering. The gap

between the 1% of the super wealthy and the 99% of the “rest of us” is widening every day, now

at its most dynamic in decades. To solve the social implications and financial complications of

this inequity, worker buyouts or worker-owned companies are becoming a more popular

business strategy throughout the country.

Essentially, by offering workers and employees the chance to buy shares in their companies,

this move simultaneously helps workers and communities raise their standard of living and

boosts worker morale by encouraging workers to literally invest in their companies.

Sweeping the Nation

Currently, about 17 million people or 12% of the U.S. workforce are employed at a variety of

worker-owned organizations. From giants Land O’Lakes and Ocean Spray (cooperatives) to

Publix Super Markets (employee majority-owned stock program), these strategies are gaining

popularity among shareholders, business owners, and employees alike.

Predominantly, worker- and employee-owned enterprises tend to outperform their competitors

and prove to be withstanding during economic downturns. A recent study revealed that

companies increase profits up to 14% when converting to the worker-owned model. Also,

thanks to the widespread use and increased performance by employees in this type of structure,

workers receive better financing to afford a buyout through social impact funds and hedge

funds.

ESOPS, Like etaGLOBAL, Are a Strong Option for Many in the Aerospace and Defense Industry

A widely-adopted type of employee-owned business, an ESOP (employee stock ownership plan)

is an effective option for many companies, especially those in the A&D industry. etaGLOBAL is

an ESOP and has experienced improved speed to market and higher quality performance since

integrating the stock ownership plan in 2007 (click here for more).

ESOPs are usually found in publicly traded and closely held companies of every size.

Shareholders benefit from minimal business disruptions and employees and management view

ESOP participation as a reward for years of dedication and hard work. ESOP ownership also

accompanies tax advantages.

An ESOP allows employees to become beneficial owners of the stock in their company.

Governed by the Employee Retirement Income Security Act (ERISA) of 1974, ESOPs are trusts

that acquire, hold, and sell the company’s stock for the employees. This fund comes from

money borrowed from lenders, investors, and shareholders. As the ESOP is paid down, shares

are allocated to employee accounts annually. Employees then receive cash in exchange for

their shares upon retirement, termination, disability, or death.

ESOP benefits include:

• Significant retirement benefits for employees
• Improved ability of companies to recruit and retain top talent
• Relationship strengthening between customers and employees

Worker buyouts, including ESOPs, can offer a wide variety of advantages to all parties involved,

from smooth exit strategies to a better quality of life. If you’re interested in what an ESOP can

offer your business or how the strategy works, contact us today.