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
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:
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.