Employee ownership could be your exit strategy

Consider a worker cooperative to help you exit your business.

October 17, 2019

10,000 boomers turn 65 every day, marking a high number of business owners who are ready to sell. Jennie Msall with the ICA group says that every owner will leave their business at some point, and having an exit strategy will smooth the process.

The ICA Group specializes in employee ownership exit strategies. While there are a variety of ways to operate your business through employee ownership, the group focuses on a Workers Cooperative model.

Through a worker cooperative, a business is owned by its workers. Employees can buy a membership to become an owner. They are then entitled to a portion of the money that the business makes and have decision-making abilities during business related votes.

How can you do it? Through a case study with another landscaping company, ICA demonstrated the process. Business valuations are necessary before any time of transaction, and ICA says those stay relevant for about three years before the company will need a new one.

First it’s good to just present the idea, and when explained properly, it helps the employees understand that buying into ownership will help secure their wages and their jobs. In their example, a landscaping company went full co-op in March and the owner was out by the end of the year.

You’re able to set criteria for employees to meet before they are eligible to become a worker-owner. It does require an adjust and change for the company, so Samatha Wolfe, member of the ICA Group, says that the co-op can be configured to resemble pretty similar management structures that the employees are used to.