Erie Chamber Blog
Sunday March 15,  2020

As a result of the aging of Baby Boomers, it’s estimated that over 4 million businesses, large and small, will sell or go out of business over the next 10 years. Many of those are right here in Erie. What will that do to our neighborhoods? Our business districts? Our families and our future?

The unfortunate reality is that 70% of business owners over 55 do not have a succession plan. What will happen to those businesses? Will they disappear? Fortunately, we may have a unique solution…..it’s called employee ownership, but very few people know about it.

What if a business owner could sell some or all of their business to their employees, receive full fair market value and the employees would pay….nothing? And what if the business could then become tax-free? Well, thanks to an Act of Congress, this is a reality! It’s called an ESOP – An Employee Stock Ownership Plan. And it works like this…

What is an ESOP?
Now, typically, ESOPs make sense for companies with 20 or more employees. But what if a company has only 5 or 6 employees and the owner(s) wish to transition from the business? Well, there’s a program for that as well. It’s called a Worker Cooperative Conversion. In a co-op conversion, the employees buy the business from the owner, using a variety of available funding sources. The employees pay off the debt using the company profits over a period of time. And the employees now equally own the business!

It’s no surprise that employee-owned businesses are much more productive than non-employee owned businesses, and wages are as much as 30% higher. Employee-owned companies:

  • Keep businesses here in our area
  • Reward Owners
  • Give employees a real ownership stake and a financial future
  • Bolster the Erie economy

The Erie Regional Chamber and Growth Partnership recently met with the nonprofit Pennsylvania Center for Employee Ownership to learn more about this remarkable program. As a follow-up, the ERCGP has partnered with the PaCEO to create a Webinar to teach interested businesses and citizens about this. The webinar will air for the first time on Monday, March 16th. Registration is available online: ESOP: Employee Ownership

For more information visit: www.OwnershipPennsylvania.org.

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